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:
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Canonisation

Canonisation

Pope declares sainthood of two Indians, four Italians.  Full Article 

Stake Sale Strike

Stake Sale Strike

Coal India trade unions call off strike in victory for Modi.  Full Article 

Arms Purchase

Arms Purchase

India approves $2.6 bln mounted gun purchase - official.  Full Article 

Interview with Bulgari CEO

Interview: Bulgari CEO

Bulgari CEO: we shouldn’t have left India so we’re back  Full Article 

Formula One

Formula One

Hamilton takes second F1 title in style.  Full Article 

Available For Remake

Available For Remake

Bollywood finally wants to pay the price for remakes  Full Article 

Davis Cup

Davis Cup

Vintage Federer seals first Davis Cup for Switzerland.  Full Article 

Movie Review

Movie Review

"Happy Ending" is old wine in an older bottle  Full Article 

Reuters India Mobile

Reuters India Mobile

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