Recording the fastest growth since July, Indian factories doing better.

The factory activity in India has increased in recent times and has been at its fastest growth pace in 17 months in July 2014. Companies had responded to new orders by increasing output even as input prices jumped sharply, as per a business survey by Markit, a global financial information service provider. The HSBC Manufacturing Purchasing Manager’s Index compiled by the firm showed an increase from 51.5 in June to 53.0 in July.

Indian factories growth rate

When an index reading goes above 50, it separates growth from contraction. The Purchasing Managers Index has been signaled as an expanding manufacturing sector for nine months. An increase in orders in July has helped improve business conditions greatly. 

Details within the survey have shown that all monitored categories had witnessed an increase in input and order flows. The strong reading was responsible for sharp increase in cost of raw materials.

The input prices have increased at the fastest pace since February 2014. The inflation might remain elevated in the upcoming months. Meanwhile, consumer inflation has eased to 7.3 percent in June 2014. However, there may be a spike in food prices , owing to below average rainfall. This might prompt the central bank to keep its key interest rates steady at its next meeting on August 5, 2014.

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