Manufacturing expands for the first time in 5 months : PMI
Activity in Indian factories expanded for the first time in five months in April as a
swelling orders pipeline pointed to a tentative Industry recovery, a survey
showed on Monday.
The ABN AMRO Bank purchasing managers' index (PMI) based on a survey of 500
companies, rose to 53.3 in April from March's 49.5, climbing above the threshold of
50 that separates expansion from contraction.
The latest reading is the highest in seven months and it has steadily risen after
hitting a trough of 44.4 in December.
The PMI survey, which is compiled by UK - based Markit Group, comes well ahead of
official statistics.
Several research notes in the past few days have pointed to improvement in
economic activity in the months ahead. But the central bank remained cautious
about the outlook at its policy review last week.
Manufacturing makes up about 16 percent of India's gross domestic product.
Government data shows India's factory output fell for the third time in five months in
February as the global slowdown hit hard but analyst said they saw some signs of
revival after a dismal March quarter.
The boost in manufacturing index came from a surge in new orders. The new orders
index rose to 54.9 from 49.5 in March.
The Reserve Bank expects the economy to grow at around 6 percent in 2009 / 10, a
seven - year low, after growing at an average rate of around 9 percent or more in
three fiscal years to March 2008.
In order to stimulate demand in Asia's third - largest economy, the central bank has
aggressively cut rates since October, most recently last week and has flooded the
banking system with cash to stoke bank lending.
The key short - term lending rate has now been cut by 425 basis points in six moves
to stand at 4.75 percent.
The government has cut factory gate duties and announced stimulus packages
including $4 billion in extra spending to protect growth in the face of the global slowdown.
Source : The Economic Times
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