India’s manufacturing sector remains strong, with output rising for the 47th successive month in February. The seasonally adjusted HSBC Purchasing Managers’ Index™ was 54.2 for the month, up from 53.2 in January, signalling a further improvement in business conditions. Nevertheless, the index was below the long-run average of 55.7.
Inflation pressures remain firm, with input cost inflation holding steady and inflation of output prices picking up
Chief Economist for India and ASEAN, HSBC
The pace of production growth during February was solid, reflecting higher levels of new business, and faster than in January. Almost 35 per cent of monitored companies signalled increased output, while 17 per cent registered a fall.
New orders increased at a solid pace, with anecdotal evidence suggesting this was in line with stronger demand. Export orders rose, though growth was at the slowest pace in six months.
Manufacturing employment grew slightly to meet higher production requirements. Input prices increased in February, continuing a trend seen since April 2009, with the pace of inflation robust. Average selling prices showed the strongest rise since August 2012.
Leif Eskesen, Chief Economist for India and ASEAN at HSBC, said: “Manufacturing activity picked up on the back of stronger growth in domestic orders. Together with some replenishment of inventories, this lifted growth in output and purchases. Inflation pressures, however, remain firm, with input cost inflation holding steady and inflation of output prices picking up. The numbers underscore that the room for monetary policy easing is limited, even with progress on fiscal consolidation.”
The seasonally adjusted PMI™ is designed to give a single-figure snapshot of manufacturing operating conditions. Readings above 50.0 signal improvement and readings below 50.0 signal deterioration.
Brazil’s upturn continues
Brazil’s manufacturers have made a solid start to 2013 with production and new orders growing. The HSBC Brazil Purchasing Managers’ Index™ was 52.5 in February, down slightly from January’s 22-month high of 53.2. The index, which is seasonally adjusted, has stayed above 50.0 for five consecutive months.
Firms reported improved domestic demand as the main spur to growth, though there was also a modest rise for some in export orders.
Andre Loes, Chief Economist, Brazil, said that the PMI™ figure was “in line with our expectation of a modest recovery of the economy as a whole”.
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