One of the most dependable indices, that records the status of the manufacturing sector, The HSBC Markit Purchasing Managers Index (PMI) reached its peak in a year and a half to 57.6 in January 2010. In December 2009, the index was at 55.6.
Robert Prior Wandesforde, a senior Asian economist, HSBC said that any concern about India’s manufacturing recovery was falling, should be given up. A 2nd successive hike in PMI has taken the cycle to a new high, in line with a double-digit increase in industrial production.
This good news comes in the background of RBI’s decision taken last week to tighten fiscal monetary policy by hiking the CRR by 75 basis points. The central bank was also optimistic about the strong growth in industrial production.
The latest government data shows that industrial output which is judged by the index of industrial production (IIP) increased at a sturdy rate of 11.7% in November.
New export orders index showed a higher than 5 point increase, the highest from October 2007. Companies benefited from growing new orders that in turn made them increase their production.
But the sad news is that while manufacturing sector showed rapid surge, the employment sector is yet to show any signs of recovery. The index marked a nominal hike in industry employment in January due to increased production requirement and capacity limitations. However, this hike was the highest in nearly a year and a half.
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