Growth in manufacturing slowed to a three-month low in January as new export orders lost momentum, a business survey showed on Friday, underscoring the risks to Asia?s third largest economy from weak global demand, particularly in Europe. The HSBC Markit manufacturing Purchasing Managers? Index (PMI), fell to 53.2 in January, after surging to a six-month high of 54.7 in December.
The January PMI reading, which gauges business activity in factories but not its utilities, was the lowest since October. ?The growth momentum in the manufacturing sector eased in January as a slower expansion in new orders slowed output growth,? said Leif Eskesen, economist at HSBC.
Although India appears set to end the 2012-13 fiscal year ending in March with its slowest economic growth in a decade, for almost four years the monthly PMI has held above 50, the level that divides growth and contraction compared to the previous month.
The PMI survey showed stocks contracting, but less quickly than in December. Relatively weak global trade is partly to blame, particularly from Europe, India?s largest trade partner, with the debt-ravaged euro zone economy expected to contract again this year. The new export orders sub-index slipped to 54.6 in January, showing the slowest pace of growth since October.
It was a disappointing signal for an economy that needs to see a narrowing in a current account deficit that hit a record 5.4% of GDP in the September quarter, with a similar gap expected in the December quarter.
Most recent official data shows India?s industrial output grew in just three of the eight months through November, when it unexpectedly shrank 0.1% from a year earlier as exports fell for an eighth month in a row.
The HSBC Markit survey also showed input and output prices rose at a slower pace during the month, suggesting India?s inflation rate, which slowed to a three-year low of 7.18% in December, is unlikely to change much, at least for now.
