The pace of growth in India’s factory sector inched up in April, supported by bulging order books, but slower output growth and increasing price pressures dampened sentiment, a business survey showed on Wednesday.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, rose to 54.9 in April from 54.7 in March.
The index has remained above the 50-mark that divides growth from contraction for more than three years.
“Activity in the manufacturing sector expanded at a slightly faster pace in April,” said Leif Eskesen, chief economist for India & ASEAN at HSBC. “While output growth moderated ... new orders continued to pour in, including for exports.”
The new orders sub-index rose to 61.1 in April after falling to 58.1 in March, buoyed by strong exports, but while remaining solidly above 50 the factory output index fell for the third straight month.
However, actual industrial output data is painting a bleaker picture with the country posting sluggish factory production growth of 4.1% in February from a year ago, way below the 6.6% expected by analysts.
That does not bode well for Asia’s third largest economy as factory output accounts for roughly 15% of gross domestic product (GDP).
Last month economists cut their GDP forecasts for the fifth straight quarterly Reuters poll and now expect growth to average 7.1% in the fiscal year to March 2013. The government is more optimistic, expecting the economy to grow 7.6% in the same period.