Manufacturing activity in India expanded for a second straight month in May to its highest in eight months,a survey showed,reflecting a revival in domestic demand that could drive growth in the coming months. The Market Purchasing Managers Index (PMI) based on a survey of 500 companies,rose to 55.7 in May from Aprils 53.3,well above the threshold of 50 that separates expansion from contraction. It hit a trough of 44.4 in December and has steadily risen since then. The manufacturing index was boosted mainly by the new orders index,which rose to 59.1 from 54.9 in April. I think the picture that is emerging from recent data is some sort of a stabilisation in domestic demand,possibly due to higher government spending and restocking demand, said Sonal Varma,an economist at Nomura Research. The PMI numbers comes after data on Friday showed Asias third biggest economy expanded faster than expected in the March quarter boosted by strength in the farm and services sector. The pickup in new orders shows that domestic-demand should gather momentum in the coming months, Varma said. Manufacturing makes up about 15 per cent of Indias gross domestic product and Industrial output fell 2.3 per cent from a year earlier in March,its steepest annual pace in at least 14 years.
