New business helps add pace to manufacturing growth

NEW DELHI: India's manufacturing sector expanded at a faster pace in January than in the month before because of a sharp increase in overall new business, a private survey showed on Tuesday.

The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, rose to 56.8 from 56.7 in January.

A reading of over 50 on the PMI shows an expansion and below that contraction.

"The manufacturing sector started the year out in style, with the growth momentum picking up a tad led by higher output as order books continue to thicken, reflecting, in particular, strong demand from domestic clients," said Leif Eskesen, Chief Economist for India & ASEAN at HSBC.

Though stronger than in December, the reading for January was still lower than November's nine months high.

The reading on the PMI has been at odds with the low growth in manufacturing reported by the index of industrial production, or IIP.

The industrial growth, as measured by the IIP, dropped to a 18-month low of 2.3% in November.

The PMI noted the high input cost pressures on manufactures saying that the rate of input cost inflation has been highest in the history of the series.

Higher raw material prices drove the latest rise in costs according to the note.

"Tight capacity yet again pushed up input and output prices at an accelerated pace," said Mr Eskesen.