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Here Is Why Indian Factory Activity Is Perceiving Stronger Growth In Upcoming Months

Indian manufacturing activity expanded for a fourth consecutive month in April, helped by stronger growth in new orders although rises in output and employment slowed, a business survey showed on Tuesday.

The Nikkei/Markit Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, held steady at March’s 52.5 last month, its fourth month above the 50 mark that separates growth from contraction.

“Consumers were the key drivers of growth,” said Pollyanna De Lima, economist at IHS Markit. “Buoyant domestic demand coupled with sustained growth of new orders from abroad boosted the upturn in total new business received by Indian manufacturers in April.”

A new orders sub-index rose to a six-month high of 53.8 last month from March’s 53.6. Foreign demand also rose, although at a slower pace.

The increase in demand only provided a more modest lift to overall output and employment as higher prices of raw materials ate into firms’ profits.

But despite rising cost burdens, factory gate prices barely rose as owners tried to sustain demand still recovering from Prime Minister Narendra Modi’s shock move late last year to ban high-value currency notes that caused a huge disruption.

Decent economic growth and low inflation support the Reserve Bank of India’s recent shift to neutral from an accommodative policy stance.

The central bank is expected to hold its policy rate steady at 6.25 percent at least until October next year, with the next move likely to be a cut.

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