PMI Designed to Measure Performance of the Manufacturing Sector released by HSBC

The HSBC Purchasing Managers' Index ( PMI) - a headline index designed to measure the overall performance of the manufacturing sector - registered 54.2 in December, up from 51.0 in November. The PMI was released by the banking major HSBC on 2 January 2012. The index indicated the strongest improvement in business conditions since June 2011. New orders from overseas clients also grew at a faster pace than November 2011, the second consecutive expansion after shrinking for four months.

India’s manufacturing activity was at a a six-month high in December 2011 on account of an increase in factory output and new orders from domestic and international firms. The HSBC Markit India Manufacturing PMI jumped to 54.2 from 51.0 in November, its biggest monthly rise since April, 2009.
The index stayed above the 50 mark that separates growth from contraction for 33 months now. The PMI or Purchasing Managers’ Index dipped to 50.4 in September 2011.

Data released by the government had showed a 5.1 per cent contraction in the IIP numbers in October 2011, its slowest since March, 2009. The successive rate hikes by the RBI and weak macroeconomic conditions domestically and globally were blamed for the contraction. The official industrial output data showed factory output plunged 5.1% in October, raising worries about the health of the manufacturing sector. This was the first fall in industrial output in nearly two years.

Manufacturing sector employment also increased slightly during December 2011, ending a period of job losses that had set in during August 2011. Costs went up on higher prices of raw materials and fuel on the input front, adding with higher demand. The demand from clients allowed manufacturing companies to increase output prices at an accelerated pace to pass on the costs.