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

Drug Pricing

REUTERS SHOWCASE

Modi Speaks

Modi Speaks

PM Modi says al Qaeda will fail in India - CNN.  Full Article 

Price Cap

Price Cap

India caps prices of 36 more drugs to improve access - govt official.  Full Article 

India-US Diplomacy

India-US Diplomacy

Obama to nominate Indian-American Richard Verma as India ambassador - congressional source.  Full Article 

Importing Rice

Importing Rice

Top rice exporter India importing over 100,000 T on temporary supply squeeze.  Full Article 

GSK Fined

GSK Fined

China hands drugmaker GSK record $489 mln fine, sentences executives.  Full Article 

HMT in Demand

HMT in Demand

Fans rush to HMT as watchmaker marks time.  Full Article 

Reuters India Mobile

Reuters India Mobile

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