New Delhi: Shrinking export orders and sluggish output dragged manufacturing growth in the world’s two fastest growing economies China and India.
India’s HSBC manufacturing Purchasing Managers’ Index (PMI) fell to 52.9 in July, from 55.0 in June – its biggest one-month drop since September last year; whereas, China’s factory purchasing managers’ index fell to an eight-month low of 50.1 in July.
With clear signs the global economy is slowing, Indian export orders fell slightly for the first time in nine months.
Electricity outages across India over the last month also crimped production while factories were without power.
“Manufacturing activity grew at a slower clip in July on the back of power outages and a moderation in new order inflows, with the weak global economic conditions dragging down export orders,” said Leif Eskesen, economist at HSBC, sponsor of the survey.
But the impact of the unusually severe blackouts of the last two days of July, which hit grids in a dozen northern states home to around 670 million people, was not included in the survey.
That suggests manufacturing last month may have been hit harder than the headline PMI number suggests. Reuters
But the impact of the unusually severe blackouts of the last two days of July, which hit grids in a dozen northern states home to around 670 million people, was not included in the survey.
That suggests manufacturing last month may have been hit harder than the headline PMI number suggests.
Manufacturing accounts for around 15 percent of India’s gross domestic product, so a slowdown would not augur well for Asia’s third-largest economy, already grappling with its weakest growth in almost a decade.
China PMI shows factory sector barely growing
However, China’s factory sector barely grew in July. The official factory purchasing managers’ index fell to an eight-month low of 50.1 in July, while a rival HSBC survey indicated the more market-sensitive private sector is starting to recover.
“It is clear that the manufacturing sector is doing very poorly, and requires policy support,” Dariusz Kowalczyk, senior economist at Credit Agricole-CIB in Hong Kong said.
The surveys back the view that the bottom of China’s slowdown in economic growth was probably in the second quarter of 2012 with a mild rebound set to begin in the third quarter.
China’s top leaders, President Hu Jintao and Premier Wen Jiabao, promised to step up policy “fine tuning” in the second half of the year to support the economy, the official Xinhua news agency reported on Tuesday.
“The low point will likely be pushed to the third quarter, although that depends on the policy response,” analyst Zhou Xizhen of Citic Securities in Beijing said.
That suggests manufacturing last month may have been hit harder than the headline PMI number suggests.
Reuters
