1. Nov factory growth fastest in nearly 2 yrs, inflation revives, shows HSBC PMI

Nov factory growth fastest in nearly 2 yrs, inflation revives, shows HSBC PMI

Indian factory activity expanded at its fastest pace in nearly two years in November as burgeoning order...

By: | Bangalore | Updated: December 1, 2014 11:38 AM
The HSBC Manufacturing PMI, compiled by Markit, rose to 53.3 in November from 51.6 in October. Reuters

The HSBC Manufacturing PMI, compiled by Markit, rose to 53.3 in November from 51.6 in October. Reuters

India’s manufacturing sector output accelerated in November at the quickest pace in nearly two years, driven by robust output and new orders, an HSBC survey said today.

The headline HSBC India Purchasing Managers’ Index (PMI) — a composite gauge designed to give a single-figure snapshot of manufacturing business conditions — stood at 53.3 in November significantly higher from 51.6 in October.

The manufacturing sector output, improved for the 13th month in a row and reached a 21-month peak in November.

A figure above 50 indicates the sector is expanding, while a figure below that level means contraction.

“Manufacturing activity accelerated further in November led by higher output and new orders. Domestic orders saw the biggest increase, even as new export orders continued to be strong,” HSBC Co-Head of Asian Economic Research Frederic Neumann said.

November data indicated stronger-than-expected demand, as new order growth accelerated to the quickest in 21 months. Similarly, foreign orders received by Indian goods producers continued to rise strongly in November.

In spite of accelerated expansions in output and new business, employment in the manufacturing sector remained broadly unchanged in November, the report said.

“The sharp rise in input prices was surprising, but future prints may be lower as falling commodity prices eventually lead to softer intermediate good prices. Meanwhile, the pick-up in output prices could partly be signalling some revival in pricing power among businesses,” Neumann said.

A cautionary note was, however, provided by the HSBC survey regarding input costs and output charges, as inflationary pressures intensified during the month following three consecutive months of easing.

“Higher output and an uptick in final prices should convince the RBI to stay on hold in the upcoming meeting,” Neumann said.

The RBI, which has maintained the interest at elevated level for the past 10 months, is scheduled to announce it policy review tomorrow.
According to official figure, wholesale inflation came down to a five-year low at 1.77 per cent in October while retail inflation hit a record low of 5.52 per cent in the same month.

Meanwhile, the country’s economic growth fell to 5.3 per cent in the second quarter from 5.7 per cent rate in the first three-month period ended June, raising the clamour for rate cut by the RBI tomorrow.

India’s Mfg sector output at nearly 2-year peak in Nov: HSBC

(Reuters) Indian factory activity expanded at its fastest pace in nearly two years in November as burgeoning order books led manufacturers to accelerate output, a business survey showed on Monday.

The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, rose to 53.3 in November from 51.6 in October, its highest since February 2013, and the thirteenth consecutive month of expansion in activity.

A Reuters poll had expected manufacturing activity to lose some steam and predicted the index would fall to 51.2.

New orders were supported by strong domestic demand for consumer goods while foreign orders remained robust. The sub-index soared to a 21-month high of 56.2 from October’s 53.0.

The expansion in output encouraged manufacturers to add more jobs.

The survey also showed companies passed on additional input costs to consumers at a faster pace, which could revive inflationary pressures after several months of slowing.

“The pick-up in output prices could partly be signaling some revival in pricing power among businesses,” said Pranjul Bhandari, chief India economist at HSBC.
Economic growth slowed to 5.3 percent in the three months to September, from 5.7 percent in the previous quarter, but the Reserve Bank of India is expected to stand pat on interest rates when it meets on Tuesday despite pressure from the government to lower borrowing costs.
The RBI’s key lending rate is expected to remain unchanged at 8.0 percent until at least April.

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