India PMI hits 3-month high: HSBC

PMI India rose sharply to a high in November to 52.3 from 50.3 in the previous month.

The manufacturing and services sector index,as measured by HSBC India Composite Index,rose sharply to a three-month high in November to 52.3 from 50.3 in the previous month,even though the private sector output rose only modestly,says the HSBC Purchasing Managers Index.

8220;The HSBC India Composite Index,which covers both the manufacturing and service sectors,posted 52.3,up from 50.3 in October,to a three-month high. The seasonally adjusted business activity index posted 53.2 in November,above the 50.0 no-change threshold that separates growth from contraction. Nonetheless,the latest rise remains well below the series average,8221; HSBC Purchasing Managers Index PMI said here today.

Commenting on the PMI survey,HSBC India and Asean chief economist Leif Eskesen said,8221;the services sector demonstrated resilience,with both activity and new businesses on the rise.

Unfortunately,inflation continues to tick up as well,calling for RBI to maintain tight monetary conditions for an extended period.8221;

However,report notes that private sector output rose only modestly in the month but expansion was stronger than the fractional growth seen in the previous two surveys. Moreover,rising from October reading of 49.1,expansion was the first signalled in three months,it said,adding in contrast,output in manufacturing sector rose at the weakest pace in 32 months.

New business received by private sector companies rose for a 31st month in row in November,making it the fastest pace of growth since August,but remained well below the series average. However,the report notes that a stronger expansion in new orders received by the service providers offset a weaker rise in the manufacturing sector.

But the report says levels of outstanding business at service companies was falt in November as a concurrent rise in business activity pacified growth of new work.

Story continues below this ad

But 8220;despite a slower rise in new orders,backlogs at manufacturers accumulated at a solid rate due to production delays caused by power cuts,8221; says the report.

Significantly,the report says the overall private sector employment fell for a fourth month in a row in November but the rate of job cuts was marginal and the slowest. Job addition was weak both in manufacturing and services sectors.

Driven by rising raw material costs and higher wage and fuel bills,input prices for both services and manufacturing sector rose at a faster rate in the month,taking the overall rate of cost inflation to a three-month high.

The report further notes that services sector is optimistic that activity will increase over the next 12 months. Marketing campaigns are expected to boost new business,and therefore output. But,the degree of positive sentiment fell sharply since October the largest monthly deterioration since July 2010,with confidence at a 33-month low.