Strong domestic demand pushes up factory growth

RBI may get encouraged by good output and reduce interest rates

GN Bureau | June 1, 2015


#manufacturing   #HSBC   #manufacturing  

Riding on domestic demand, Indian manufacturing activity rose at its fastest pace in four months in the month of May, a business survey found on Monday.

The figures are expected to give another boost to a possible central bank interest rate cut. The Reserve Bank of India is holding a policy review on Tuesday.

The HSBC Manufacturing Purchasing Managers' Index, compiled by Markit, rose to 52.6 in May from April's 51.3, smashing the 51.2.

Any reading above 50 indicates expansion and May was the nineteenth straight month of industry growth. An index monitoring new business, which highlights underlying demand, jumped to 54.3 in May from 51.9.

Firms reduced staffing levels for the third month out of the last four in May. What may also cause the RBI some concern is the rate of price rises - although April inflation was well within the upper-end of the central bank's target.

The RBI is widely expected to cut its key interest rate by 25 basis points to 7.25%, when it meets on Tuesday.

Indian GDP data, which released on Friday, showed the economy grew 7.3% in the fiscal year 2014/15, and expanded faster than China for a second consecutive quarter.

While that seems healthy there are nagging doubts over the reliability of the data. Many economists believe that changes made earlier this year to the way government statisticians calculate GDP may have distorted the macroeconomic view.

Comments

 

Other News

PNB fraud: Former RBI deputy governor had warned about SWIFT

A top Reserve Bank of India official had waved the red flag, a year back, regarding the SWIFT messaging system. SWIFT was used in a fraud amounting to Rs 11,000 crore at a Punjab National Bank branch that benefited billionaire diamond jeweler Nirav Modi.   Former RBI deputy gover

What happened to Anshu Prakash

Delhi chief secretary Anshu Prakash’s claim that he was manhandled by Aam Aadmi Party (AAP) lawmakers in the presence of Delhi chief minister Arvind Kejriwal has kicked up a storm. Here is what transpired on Monday night and the events that unfolded through Tuesday.  

Is banks` messaging system SWIFT secure enough?

Is banks` messaging system SWIFT secure enough?

Modi post Modi: “It is a question of your leadership…”

Diagnosing what ails India’s governance, Bihar chief minister Nitish Kumar used to name three units or offices that are so corrupted that they are beyond redemption: village patwaris, police station darogas and Railways ticket collectors. In his stint as executive head of Bihar, he seems to have incl

Could RTI have saved banks from scams?

Could RTI have saved banks from scams?

How RTI could have prevented the PNB fraud

The Right to Information (RTI), used efficiently, could have helped activists and bankers expose irregularities much before they snowballed into full-fledged scams – the one at Punjab National Bank (PNB) being only the latest example. That is the argument coming from Shailesh Gandhi, f

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter