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Industry holds out hope for revival

Mumbai, Dec. 2: The hope that the Indian economy is well on the road to recovery brightened today after new data showed that the country’s manufacturing sector witnessed a growth in November for the first time since July, buoyed by a rising tide of new domestic orders.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI) compiled by Markit for the manufacturing industry climbed to 51.3 in November from 49.6 in October on the back of a rebound in new orders and output.

This is the first manufacturing PMI reading above 50 since July and is the highest in seven months. A PMI reading above 50 signals growth; below that threshold, it signifies contraction.

The PMI data come just days after an expansion in farm, manufacturing, construction and services sectors saw the economy recovering slightly in the September quarter. Though the second-quarter GDP number at 4.8 per cent remained below 5 per cent, it was higher than 4.4 per cent in the preceding three months. During the period, manufacturing grew 1 per cent against just 0.1 per cent in the same period last year.

The HSBC-PMI number had its impact on the stock markets with the BSE Sensex rising 106 points to its highest level in a month on the optimism that the slowdown in the Indian economy may have now bottomed out.

On the BSE, the benchmark index resumed at a lower note and remained in a range of 20770.51 to 20941 before closing at 20898.01, a gain of 106.08 points, or 0.51 per cent.

“Manufacturing activity picked up, led by a rise in new domestic orders which helped to pull up output growth,” HSBC chief economist for India and Asean Leif Eskesen said.

According to the report, manufacturing operating conditions across the country improved in November, with a return to growth of incoming new work leading companies to raise their production levels for the first time since April. Purchasing activity also rose in the latest month and job creation was sustained.

The report said the PMI had been boosted by a rebound in new orders and output. Strengthened demand resulted in a growth in new orders. Though this jump was modest, the rise in new work intakes ended a five-month period of contraction.

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