The growth of India's manufacturing sector slowed to a three month low in January, primarily due to moderation in new orders and power outages during the month, HSBC survey said today.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production -stood at 53.2 in January, after hitting a six month high level of 54.7 in December. It stood at 53.7 in November.
The index, however, remained above the 50 mark level' below which it indicates contraction.
"The growth momentum in the manufacturing sector eased in January as a slower expansion in new orders and power outages slowed output growth," HSBC chief economist for India and ASEAN Leif Eskesen said.
"To meet new orders manufacturers still rely on a draw down in stocks of finished good, which should provide support for output growth in coming months as stocks are replenished," Eskesen added.
Output at manufacturers in India rose during January. Production in the manufacturing sector advanced at the slowest pace in three months in January amid evidence that ongoing issues with the supply of power had restricted growth, it said.
New orders received by manufacturers increased for the 46th successive month, although at a slower pace compared to December, mainly on account of stronger demand and improved product quality.
Meanwhile, new export orders increased for the fifth consecutive month, and also at a solid rate, HSBC said adding panel members stated that demand from foreign clients was higher.
Besides, manufacturers raised their workforces further during the month under review, in line with the increase in workloads.
Input costs rose for the 46th successive month in January amid higher fuel and raw material prices. Firms raised their output charges to protect margins in the face of higher costs.
The Reserve Bank of India cut interest rates on January 29 for the first time in nine months, in a move to propel economic growth by easing fund flow to perk up consumption and investment demand.
The bank also lowered country's GDP forecast to 5.5 per cent in 2012-13 as against 5.8 per cent estimated earlier.