June factory activity grows at fastest pace since Feb

Tue Jul 1, 2014 10:38am IST

Men work inside a car spare parts manufacturing workshop in Kolkata May 2, 2014. REUTERS/Rupak De Chowdhuri/Files

Men work inside a car spare parts manufacturing workshop in Kolkata May 2, 2014.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

REUTERS - Indian factory activity expanded in June at its quickest pace since February while output prices rose at the fastest rate in eight months, signalling a further rise in inflation that is bound to vex the Reserve Bank of India (RBI), a business survey showed on Tuesday.

The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, advanced to 51.5 in June from 51.4 in May. A figure above 50 indicates expansion.

A jump in new export orders pushed the output sub-index to 52.4 from 51.7 in the previous two months.

"Things are gradually improving in India's manufacturing sector. Output picked up in June, supported by growing order flows, especially from overseas," said Frederic Neumann, co-head of Asian economic research at HSBC.

But domestic demand remained weak, hurting jobs growth.

"The muted pace will suit the RBI: since input and output prices are rising as well, faster growth would only stoke inflation and require tightening," added Neumann.

The survey showed firms passed on a greater cost burden to consumers. Prices charged rose at their fastest pace since October.

After May wholesale price inflation hit a five-month high any further move up would put pressure on the RBI to leave interest rates on hold for longer or even to raise them.

(Editing by Kim Coghill)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Kerry in India

REUTERS SHOWCASE

Deadly Landslide

Deadly Landslide

Landslide near Pune kills 10, scores feared trapped.  Full Article 

Fed Policy

Fed Policy

Fed presses forward with bond buying, cites uptick in inflation.  Full Article 

Big Infra Deal

Big Infra Deal

Piramal, Dutch APG tie up for $1 bln infra investment  Full Article 

E-Commerce

E-Commerce

Amazon says to invest $2 billion more in India   Full Article 

Lupin Results

Lupin Results

Q1 net profit up 56 percent on higher U.S. drug sales   Full Article 

Smuggling Gold

Smuggling Gold

Air India staff found smuggling gold  Full Article 

Economy Reboots

Economy Reboots

U.S. economy back on track with strong second-quarter rebound .  Full Article 

Auto Sector

Auto Sector

VW closes in on Toyota as global auto leader  Full Article 

Expanding Reach

Expanding Reach

Tata to invest $35 bln over 3 years, focus on new businesses   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage