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India's mfg growth eases further; slips to 9-mth low
India's manufacturing sector witnessed the weakest growth rate in nine months in August because of shrinking export orders and disruptions caused by power failures, an HSBC survey said.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) – a measure of factory production – eased to 52.8 in August, from 52.9 in July. The index, however has remained above the 50 mark – below which it indicates contraction - for more than three years now.
Electricity outages across India in August caused disruption in production as factories went without power for hours on end. It also led to rise in work backlog.
“The momentum in the manufacturing sector eased further on the back of weak external demand and output disruptions caused by the major power failures in early August,” HSBC Chief Economist for India & ASEAN Leif Eskesen said, adding, “power failures also partly contributed to a rise in backlogs of work.”
On one hand, power cuts continued to hamper production and on the other, export orders witnessed the second consecutive monthly dip because of “weaker international demand and unfavourable exchange rate conditions”, HSBC sai.
Besides, while input price rose at a slightly slower pace, output inflation picked up due to higher import costs and taxes.
“With the slowdown partly supply-driven and inflation risks still lingering, these numbers underscore that the room for policy rate cuts is very limited at the moment,” Eskesen said.
In its last quarterly monetary policy review, the Reserve Bank left key interest rates unchanged amid fears of deficient monsoon and high inflation.
India's manufacturing sector witnessed the weakest growth rate in nine months in August because of shrinking export orders and disruptions caused by power failures, an HSBC survey said.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) – a measure of factory production – eased to 52.8 in August, from 52.9 in July. The index, however has remained above the 50 mark – below which it indicates contraction - for more than three years now.
Electricity outages across India in August caused disruption in production as factories went without power for hours on end. It also led to rise in work backlog.
“The momentum in the manufacturing sector eased further on the back of weak external demand and output disruptions caused by the major power failures in early August,” HSBC Chief Economist for India & ASEAN Leif Eskesen said, adding, “power failures also partly contributed to a rise in backlogs of work.”
On one hand, power cuts continued to hamper production and on the other, export orders witnessed the second consecutive monthly dip because of “weaker international demand and unfavourable exchange rate conditions”, HSBC sai.
Besides, while input price rose at a slightly slower pace, output inflation picked up due to higher import costs and taxes.
“With the slowdown partly supply-driven and inflation risks still lingering, these numbers underscore that the room for policy rate cuts is very limited at the moment,” Eskesen said.
In its last quarterly monetary policy review, the Reserve Bank left key interest rates unchanged amid fears of deficient monsoon and high inflation.
