New Delhi: India's manufacturing witnessed an upswing trend in July 2010 on the back of new orders and better export demand, as per a private survey. The HSBC Markit Purchasing Managers' Index (PMI) went up to 57.6 in July 2010 from 57.3 in June 2010, marking 16th consecutive month of expansion in manufacturing.
The factory output index of the PMI rose to a four-month high of 62.3 in July 2010, raising expectations of further expansion in India's manufacturing growth story.
"India is on a roll. The economy was given another leg up in July as new orders continued to pour in. Even the export sector appears to be holding up well, despite worries over cooling demand abroad," according to Frederic Neumann, co-head of Asian Economics Research, HSBC.
PMI, a survey-based compilation of key manufacturing data, is considered a good leading indicator of manufacturing activity. An index level above 50 indicates expansion in manufacturing, whereas a PMI reading of below 50 indicates a contraction in manufacturing. The HSBC India Report on Manufacturing is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 500 manufacturing companies. The variables in the survey include employment, output, new orders, suppliers' delivery times, and stock of items purchased.
Even as India saw an expansion in its manufacturing sector, China's PMI dropped to 51.2 in July 2010, as per official data released on August 1, 2010. "It's a good reading, especially compared to China where production was a bit softer," said Sonal Varma, Economist at Nomura Holdings.
The Centre for Monitoring Indian Economy (CMIE) expects Indian industry to start fresh projects that will entail an investment of about US$ 140.6 billion in 2010-11.
In his monetary policy review for April 2010, D Subbarao, Governor, Reserve Bank of India (RBI) on July 27, 2010 revised the gross domestic product (GDP) growth target for 2010 to 8.5 per cent, said "Domestic drivers of growth are robust."
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