Positive turn
Indian manufacturers reported a further rise in new business during December and the latest expansion in new work intakes was the 33rd in successive months. Growth was strong and the fastest since June. Incoming new work from abroad also rose in December, with the rate of increase remaining stable overall. The increase in total new business was attributed to stronger client demand.
Commenting on the India Manufacturing PMI survey, Leif Eskesen, chief economist for India & ASEAN at HSBC said that activity in the manufacturing sector rebounded in December, led by higher demand from both domestic and foreign clients, suggesting that the momentum in the sector is not quite weak as official and more dated IP data would suggest. Mr Eskesen also stated that the rebound in growth added to the build-up in backlogs of work and also stabilised employment, which crawled back into positive territory.
According to Darshan Subramiyam, proprietor of a small-sized Nagpur based industrial pipe manufacturing unit, “Though there has not been much of a deviation from that of the past 6-7 months, things have taken a slight turn for better. Hopefully, this will be amplified in the near future and spell good for smaller players in the Indian manufacturing industry.”
The existing demand from clients allowed manufacturing companies to increase output prices at an accelerated pace to pass on rising costs. While the sequential inflation of input costs decelerated slightly, it remained high by historical standards. Overall, these numbers suggest that it is premature for RBI to replace inflation with growth as the main concern.
Priyanka Roy Chowdhury |
With the European market still embroiled in sovereign debt crisis, manufacturing in India and China depicted a strong resilience. The HSBC Purchasing Managers’ Index (PMI) registered 54.2 in December 2011, up from the 51.0 figure of November. This marked the strongest improvement in the business conditions in the Indian manufacturing industry since June 2011. Even though the overall rate of increase recorded was strong, it was still weaker than the long run series average. 
