​Know how India is rapidly growing into a manufacturing hub

Owing to improved domestic demand, the growth of Indian manufacturing sector accelerated at its fastest pace in four months in May. This was revealed in an HSBC survey today.

As per this upbeat business survey, input costs remained high and firms adopted a cautious approach on hiring.

This latest survey by HSBC was released comes just a day ahead of the Reserve Bank of India's scheduled monetary policy review where the apex bank of the country is widely expected to cut down the rates to further give a boost to the manufacturing sector, a PTI report said.

With levels of production and new orders rising at the fastest rates since January 2015, the HSBC India Purchasing Managers' Index (PMI), which has been compiled by Markit, rised to 52.6 in May as against 51.3 in April.

According to Pollyanna De Lima, economist at Markit, "PMI data signalled a further robust expansion of the Indian manufacturing economy in May. The outlook for the sector is, however, clouded by a stagnant jobs market as firms remain uncertain about the sustainability of the upturn."

The PTI report further added that despite the rise in growth, manufacturing employment was broadly unchanged in May. Citing uncertainty about the sustainability of growth, more than 99% of panelists reported same staffing levels.

"The outlook for the sector is, however, clouded by a stagnant job market as firms remain uncertain about the sustainability of the upturn," Lima added.

The total volume of new orders received by manufacturing firms also increased for the 19th successive month and at the fastest pace in four months, driven by improved demand from the domestic and foreign markets. However, the rate of expansion of overseas orders moderated in May.

There are speculations that the central bank may slash its key interest rate by 25 basis points to 7.25%, when it meets on Tuesday.
(Image: Indiatimes)