By Yati Himatsingka
BANGALORE, Nov 1 (Reuters) – India’a manufacturing growth
inched up in October from September’s 10-month low, supported by
a pick up in new orders and an easing of price pressures, a
survey released on Thursday showed.
The HSBC manufacturing purchasing managers’ index (PMI),
which gauges the business activity of India’s factories but not
its utilities, nudged up to 52.9 in October from 52.8 in
September.
The index has remained above 50, which divides growth and
contraction, for over three and a half years.
“Economic activity in the manufacturing sector picked up
slightly thanks to firm new orders,” said Leif Eskesen, an
economist at HSBC, which sponsors the survey. “Looking ahead,
the recovery in manufacturing growth is likely to be slow.”
The new orders sub-index, an indicator of future output,
edged up to 54.9 last month from 54.4 in September while export
orders grew for the second straight month albeit at a slightly
slower pace.
Data released last month showed manufacturing rose 2.9
percent in August from a year earlier after contracting 0.4
percent in the previous month. Overall output at factories,
mines and utilities rose an annual 2.7 percent.
PRICE PRESSURES EASE
Input and output price indexes fell to their lowest levels
in more than two years. But Eskesen said this did not
necessarily indicate India’s inflation, which rose to a 10-month
high of 7.8 percent in September, would cool anytime soon.
Instead, Eskesen said inflation would remain elevated for a
while yet, reflecting a Reuters poll which suggested prices will
peak in the last three months of 2012 before slowing.
The central bank has maintained that high price pressures
keep it from cutting interest rates in the face of slowing
economic growth.
The Reserve Bank of India has held interest rates steady
since April even as many other central banks cut rates.
It left rates on hold again on Tuesday but cut the cash
reserve ratio for banks, which is expected to inject 175 billion
rupees ($3.25 billion) into the banking system.
Unusually, Governor Duvvuri Subbarao gave fairly explicit
policy guidance, saying the central bank might ease policy in
January to March, the final quarter of the fiscal year, when it
expects inflation to ease.
The central bank is under pressure from the government and
industry to cut rates to try to help revive economic growth,
which has slipped to its weakest pace in almost three years.
($1=53.84 rupees)
(Editing by Andy Bruce and Neil Fullick)
