The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index was at 51.5, according to a survey release, as against 51.4 in May.
Although still sluggish, June’s expansion marked the eighth straight month that manufacturing activity has increased as the economy recovers from a severe slowdown seen in recent years. “Things are gradually improving in India’s manufacturing sector,” HSBC said.
Growth in export orders hit a three-month high, which was an important driver of the improved performance, HSBC said. Increased demand led manufacturers to build up stocks, speeding up their purchases to the fastest rate since March 2013.
“The muted pace will suit the RBI, since input and output prices are rising as well, faster growth would only stoke inflation and require tightening,” it said.
Growth in the output of infrastructure industries slowed to 2.3% in May from 4.2% in April, government data showed on Monday.
Separate data from Monday showed the government’s fiscal deficit ballooned in April and May, reaching 2.408 trillion rupees, or 45.6% of the fiscal-year target.
The economy has expanded at less than 5% in recent quarters, a far cry from the nearly 9% growth seen as recently as in 2011. Economists widely predict the economy will grow about 5.5% this fiscal year.
