Indian factory activity returns to modest growth in January - PMI

Lucy Hill
February 3, 2017

The closely watched Markit/CIPS UK Construction Purchasing Managers' Index stood at 52.2 last month, compared with analysts' expectations for a 53.8 figure and with the 54.2 reading recorded in December, which was the fastest pace in nine months.

Individually, there were slower increases in output, new orders and employment. It returned back to above 50 growth zone after declining last month due to demonetisation.

In a sign that factories have started the year on a better footing, the sub-index measuring new orders also nudged back above the breakeven mark, with domestic demand driving the pace as export orders remained in contraction.

That's down from 56.2 in December, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.

A number of manufacturers said they were seeing rising sales to energy sector clients in particular, the report said, suggesting the hit to the economy from cheap oil prices was abating. "IHS Markit is now forecasting a solid 6.4% increase in GDP for 2017".

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"There were more positive trends in terms of staff hiring and business optimism regarding the year-ahead outlook", Markit economist Tim Moore said.

According to a statement by Nikkei today, January saw weaker declines in both production and new orders, with the former declining at the softest pace in over 1½ years.

It added that employment remained in growth territory for the fifth consecutive month, which the job creation rate eased further from November's 13-month high and was only marginal overall.

Goods producers continued to cut back on staff numbers, and on the price front, input prices rose at the sharpest rate in almost six years, leading to an increase in prices charged. Capacity constraints will tend to put upward pressure on prices and curb the potential for higher output.

Activity levels across China's manufacturing sector continued to improve in January, continuing the solid if not spectacular performance seen the in the second half of 2016.

Other reports by TheDailyFarc

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