Manufacturing activity in the country accelerated in August with the sector
expanding at its fastest pace in nine months, amidst strong demand a revival of
inflationary pressures, the ABN AMRO Bank purchasing managers'' index (PMI) showed.
saw the strongest improvement in Indian manufacturing operations since November
when it rose to a seasonally adjusted 57.9 from 52.9 in July, when it touched
its lowest in 28 months.
PMI, compiled by UK-based NTC research and sponsored by the Dutch Bank, tracks
changes in manufacturing business conditions across 500 companies each month on
output, new orders, employment and prices.
reading above 50.0 signals expansion while readings below 50.0 suggests contraction.
PMI hit a peak of 59.3 in October 2006 but has been declining since then as the
Reserve Bank tightened its monetary policy to cool prices in Asia''s third-largest
economy, which grew at an annual 9.3 per cent in the April-June quarter.
RBI also raised its key short-term lending rate five times since June 2006 and
increased banks'' reserve requirements by 200 basis points since December.
its annual report last week the RBI said inflationary pressures could persist
due to high global commodity prices and capital flows, even though inflation has
eased to just below four per cent annually in August from a two-year high of 6.69
per cent in January.
new orders index rose sharply to 64.8 in August from 55.7 in July. The new export
orders index climbed to 54.9 in August from 51.3 in July. The output index rose
to 60.7 in August, a nine-month high.
price inflation accelerated sharply in August due to strong demand for raw materials
including paper, metals and food items, but companies were able to pass on higher
manufacturing cost to consumers, the study said.
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