HSBC India Purchasing Managers’ Index (PMI) has reportedly measured the current status of the manufacturing sector in India. The findings pointed out that the sector has seen a two-year high in December at 54.5, while the index was 53.3 in November.
This is a huge moral boost to the sector. In last two years manufacturing activities have grown at the best speed as new orders from domestic as well as foreign sectors kept pouring in and price hikes were kept to minimum rates by the factories. This is the fourteenth consecutive month when the index has stayed above the watershed 50-mark. This point separates growth and contraction. In December demand has increased hugely as new order increased for the fourteenth month.
Export business has also seen impressive growth in December by the Indian manufacturing companies. Since April 2011, new work from abroad has expanded at the fastest rate in last two years. The rate of expansion has been spread across all sectors and it has been the fastest this year since 2012-end. During December, business conditions have improved further in all the three market groups and this month the expansion has been the best in consumer goods sector. New orders from the consumer sector have seen a steep rise and rise in the investment goods has also boosted economic growth.
But in last three years, factories have also terminated their employees at large, though there has been a continuous growth in production and incoming new work. Job-losses have been very much there in two surveyed sectors, though the same is not applicable for intermediate goods. In December, input prices of metals, chemicals and electronics were under pressure due to inflation, but cost inflation has seen five-year-low at this period too. HSBC India Manufacturing PMI data reinstates the fact which finance minister Arun Jaitley announced during the budget season that Indian economy will see huge growth in 2015-16. Inflation will also see a low and Reserve Bank of India is expected to cut interest rates this year too.
