Manufacturing growth slows down in Feb: PMI survey

Indias manufacturing sector expansion slowed slightly in February from a month ago,although the pace of growth remained healthy as new orders touched a 10-month high,a widely-tracked survey said.

The HSBC manufacturing Purchasing Managers Index (PMI),compiled by Markit,eased to 56.6 in February from 57.5 in January,which was an eight-month high. A reading above 50 shows that the sector is growing,while a reading below 50 means the segment is contracting. Output growth eased in February,but remained above trend and rising domestic orders suggests that it should remain well-supported in coming months absent a further worsening of global economic conditions, HSBC chief economist for India & ASEAN Leif Lybecker Eskesen said.

The report,however,said that with inflation still coasting above trend,the RBI has to embark on its easing cycle in a calibrated fashion,meaning not too soon and not too aggressive. Although headline inflation eased in January,it remained well above RBIs comfort zone.

With output growing above trend,factories are still operating under tight capacity. Backlogs of work rose to 52 in February as against 51.6 in January and supplier delivery times worsened to 49.3 in February as against 50.3 in January. This is likely testament to the inadequate implementation of key supply side reforms,which has left the supply side of the economy struggling to keep up, Eskesen said.