India factory output eases in April on weak demand
Banking giant HSBC said its purchasing managers index (PMI) fell to 51.3 points in April, down from 52.1 in March and just shy of the five-month low of 51.2 points in February.
“Total new orders increased at a weaker pace and, as a consequence, companies reduced staffing levels and raised output to a lesser degree,” said Pollyanna De Lima, an economist at Markit financial services.
According to the survey, which is seen as a harbinger of industrial expansion and economic health, a reading of more than 50 points suggests expansion while anything below indicates contraction.
“Despite recording softer rates of expansion, the Indian manufacturing sector held its ground in April, benefiting from ongoing improvements in operating conditions.”
“However we are yet to see growth lead to meaningful job creation, as the index measuring employment has shown little change to staff numbers since the beginning of 2014,” De Lima said.
A revamp of the way India measures its economy means its growth has overtaken that of powerhouse China, making it the fastest growing major economy. But experts have raised questions about the methodology.
The right-wing government is attempting to push through parliament economic reforms aimed at hiking foreign investment and development projects to boost growth and help create jobs for tens of millions of young people.
The results of the survey, along with falling inflation, also raise expectations on the central bank to lower interest rates in a bid to spur growth.
Reserve Bank of India governor Raghuram Rajan has cut rates twice this year after inflation eased, although key rates were left unchanged at the bank’s last meeting in April.
Price rises cause hardship for India’s tens of millions of poor.