New Delhi, India (4E) – Manufacturing sector activity in India accelerated in January at its fastest pace in 10 months, easing concerns that Asia’s third-largest economy is slowing down, according to a survey released Monday.
The seasonally adjusted India Manufacturing Purchasing Managers’ Index (PMI) by HSBC and Markit increased to 51.4 in January from 50.7 in the previous month. A reading above 50 means expansion in the sector, while a number below 50 indicates contraction.
The increase in new orders, particularly from export markets, boosted the expansion, according to HSBC. Manufacturers raised production for the third straight month, with output climbing to its strongest performance since February as they address increasing demand.
Lower investments because of slow implementation of economic reforms, bureaucratic bottlenecks in the approval of industrial projects and poor condition of infrastructure have led to India’s weakest economic growth in a decade, while inflation remains stubbornly high in the last four years.
The government announced on Friday that it is sharply lowering its growth forecast for the financial year ended last March to 4.5 percent from a previous estimate of 5.0 percent, suggesting that the slowdown may have been worse than analysts had earlier anticipated.