MUMBAI, July 1 (Reuters) - Manufacturing activity in India slowed slightly in June but still expanded for a third straight month, a survey showed, reflecting strong local demand even as exports showed nascent signs of improvement.
The Markit Purchasing Managers' Index (PMI) based on a survey of 500 companies, fell slightly to 55.34 in June from May's 55.7, which was the highest in eight months.
Still, it is above the threshold of 50 that separates expansion from contraction. It hit a trough of 44.4 in December and has steadily risen since then.
'The strengthening of the domestic market signalled by the latest data is especially pleasing, and should hopefully be reinforced if the recovery in employment gains traction,' said Rob Dobson, a senior economist at Markit.
'Signs that manufacturers' pricing power may be returning will also provide some welcome respite for profit margins,' Dobson said.
The new orders index fell to 58.6 from 59.1 in May.
Manufacturing makes up about 15 percent of India's gross domestic product.
There have been many signs that a slump in growth may be bottoming out.
Car sales rose an annual 2.5 percent in May, climbing for the fourth month, and strong demand in rural and semi-urban areas pushed up motorcycle sales by 12.3 percent from a year earlier.
Manufacturing output in April rose 0.7 percent from a year earlier, recovering from March's 3.3 percent decline.
The central bank expects the economy to grow about 6 percent in fiscal year to the end of March, down from 6.7 percent in the previous year, but private-sector economists forecast a range between 5.8-7.2 percent.
The central bank and the government have taken aggressive steps since October to stimulate the economy. The key short-term lending rate, for instance, has been cut by 425 basis points in six moves to 4.75 percent.
(Reporting by V.Ramakrishnan; Editing by Neil Fullick) ((ramakrishnan.venkataraman@thomsonreuters.com; +91-22-6636-9039; Reuters Messaging: ramakrishnan.venkataraman.reuters.com@reuters.net)) Keywords: INDIA ECONOMY/PMI (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The Markit Purchasing Managers' Index (PMI) based on a survey of 500 companies, fell slightly to 55.34 in June from May's 55.7, which was the highest in eight months.
Still, it is above the threshold of 50 that separates expansion from contraction. It hit a trough of 44.4 in December and has steadily risen since then.
'The strengthening of the domestic market signalled by the latest data is especially pleasing, and should hopefully be reinforced if the recovery in employment gains traction,' said Rob Dobson, a senior economist at Markit.
'Signs that manufacturers' pricing power may be returning will also provide some welcome respite for profit margins,' Dobson said.
The new orders index fell to 58.6 from 59.1 in May.
Manufacturing makes up about 15 percent of India's gross domestic product.
There have been many signs that a slump in growth may be bottoming out.
Car sales rose an annual 2.5 percent in May, climbing for the fourth month, and strong demand in rural and semi-urban areas pushed up motorcycle sales by 12.3 percent from a year earlier.
Manufacturing output in April rose 0.7 percent from a year earlier, recovering from March's 3.3 percent decline.
The central bank expects the economy to grow about 6 percent in fiscal year to the end of March, down from 6.7 percent in the previous year, but private-sector economists forecast a range between 5.8-7.2 percent.
The central bank and the government have taken aggressive steps since October to stimulate the economy. The key short-term lending rate, for instance, has been cut by 425 basis points in six moves to 4.75 percent.
(Reporting by V.Ramakrishnan; Editing by Neil Fullick) ((ramakrishnan.venkataraman@thomsonreuters.com; +91-22-6636-9039; Reuters Messaging: ramakrishnan.venkataraman.reuters.com@reuters.net)) Keywords: INDIA ECONOMY/PMI (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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