June Manufacturing PMI at three month high

NEW DELHI: Manufacturing activity improved in India in the month of June buoyed by healthy domestic demand, a private survey showed on Friday.

The Nikkei India Manufacturing Purchasing Managers' Index, or PMI, edged up to 51.7 in June from 50.7 in May. A reading above 50 on the index indicates economic expansion.

"The domestic market continues to be the main growth driver, as the Indian economic upturn provides a steady stream of new business. Nonetheless, there were also signs of an improvement in overseas markets, as new foreign orders rose in June following a decline in May," said

Pollyanna De Lima, economist at Markit, which compiles the index.

The report said that favourable operating environment encouraged businesses to purchase additional inputs, but was insufficient to generate jobs.

The main contributing factors to the upward movement in the PMI were stronger rates of growth in new orders and output, both of which reached three-month highs in June.

Meanwhile, cost inflation eased, while output charges were broadly unchanged.

"This lack of inflationary pressures provides the Reserve Bank of India (RBI) with further leeway to boost economic growth through cutting its benchmark rate," said De Lima.