Factories fail to reflect Sensex

Manufacturing grows slowest in 9 months
New Delhi: India’s manufacturing sector activity grew at slowest rate in nine-months in September, according to HSBC Manufacturing PMI. The growth in the manufacturing sector cooled to pre-election levels in September, as output and domestic orders slowed, said HSBC. It said that the details of the survey suggest that the capital goods sector is a source of weakness.
“Reforms to shore up business sentiment post-elections, so as to revive the investment cycle, are clearly needed. Input price inflation eased, which is positive news, but this decline could prove temporary if the pickup in growth next year drives up price pressures,” said HSBC.
HSBC’s India manufacturing PMI fell to 51 in September against 52.4 in August due to a dip in output (52.3 against 54.1 in August) and new orders (51.3 against 54.5 in August).
The slowdown appeared to owe to weaker domestic demand, since new export orders picked up (54.7 against 54.5 in August), it said. Firms also lowered both quantity of purchases.
“Big-bang reforms will likely take time given the new government’s minority status in the upper house. Luckily, lifting India’s growth potential does not depend on legislation alone,” said HSBC.
It said that improving administration and reducing regulation can do a lot to attract investments. “On this front, the new government has picked up the pace of reforms with its new ‘make-in-India’ campaign, which aims to reduce barriers,” it said.
( Source : dc correspondent )
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