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01 Apr 2013

Power cuts darken growth

Spices for sale in India

Manufacturing activity slowed in March after power cuts and a drop in new orders

Persistent power cuts held back India’s manufacturers in March. Though conditions improved, the seasonally adjusted HSBC Purchasing Managers’ Index™ (PMI™) was 52.0, the lowest figure for 16 months, and down from 54.2 in February.

Leif Eskesen, Chief Economist for India and ASEAN at HSBC, said: “Manufacturing activity lost momentum in March, with output growth slowing notably on the back of a deceleration in new orders and power outages.”

Manufacturers ran down their stock levels to meet demand because power cuts caused disruption to day-to-day production. However, output still increased, albeit modestly.

Manufacturing activity lost momentum in March, with output growth slowing notably on the back of a deceleration in new orders and power outages

Leif Eskesen,
Chief Economist for India and ASEAN at HSBC

“This suggests that output could get a lift in coming months as inventories are replenished,” Mr Eskesen said. “Encouragingly, input and output price inflation eased. Even so, the scope for further monetary policy easing remains limited.”

Input prices rose at the slowest rate for 32 months, and output prices increased at the slowest rate since October. Firms indicated that competition from other companies had prevented them from passing on cost increases in full.

The rate of job creation was the fastest since October, according to the PMI™. Growth in new orders was moderate and the slowest for 16 months. Export orders rose slightly.

PMIs™ are a monthly indicator of economic trends. The survey is based on responses from purchasing executives in more than 420 manufacturing companies. Any figure above 50.0 signals expansion, while below 50.0 indicates contraction.

The intellectual property rights to the HSBC India Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under licence. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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