Asia’s third largest economy, India’s manufacturing
sector grew at its fastest pace in two years in December, ending 2014 on a high
note on strong orders flows, including from abroad, an HSBC survey said.
The headline HSBC India Purchasing Managers’ Index
(PMI) — a composite gauge designed to give a single-figure snapshot of
manufacturing business conditions — stood at 54.5 in December, up from 53.3 in
the prior month.
The manufacturing sector output improved for the
14th month in a row and reached a two-year peak in December. A figure above 50
indicates the sector is expanding, while a figure below that level means
contraction.
The accelerated growth of the manufacturing sector
was reflected by faster expansions in output, new business and foreign orders.
Manufacturing companies registered a further rise in
new export business in December and new work from abroad expanded at the
quickest pace since April 2011.
Meanwhile, contrasting with continued growth of
production and incoming new work, staffing levels in India’s manufacturing
economy declined in December. The latest data also indicated towards a brighter
picture in terms of prices, as inflationary pressures eased during the month.
RBI Governor Raghuram Rajan in the monetary policy
review meet in December, 2014, had kept interest rate unchanged, saying that a
shift in stance is ‘premature’ but hinted that a cut may come early next year
if inflation continues to ease and government acts on the fiscal side.
Accordingly, the repo rate continues to be at 8 per
cent while the cash reserve ratio has also been retained at 4 per cent.
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