India's manufacturing PMI slumps in Sept: HSBC-Markit

Manufacturing activity in India slowed in September after being steady for the past two months, as new orders and output declined, according to a private survey done by HSBC Holdings Plc and Markit Economics. The monthly purchasing managers' index (PMI), based on a survey of 500 companies, slowed to 55.1 in September from 57.2 in August, HSBC-Markit said in a statement. This was the lowest reading since November last year. A reading over 50 indicates expansion while anything below that threshold denotes contraction. This was the 18th consecutive month India's manufacturing PMI has remained above the 50 mark.



"The manufacturing sector shows signs of cooling after a red-hot pace earlier in the year," Frederic Neumann, co-head of Asian Economics Research at HSBC, said in a statement. "Capacity constraints may be partly responsible for this, in addition to the fading fiscal stimulus," he added. Still, manufacturing companies' order books continue to grow at a robust pace, which means central bank policymakers cannot afford to rest easy, Neumann said. He expects the Reserve Bank of India (RBI) to hold policy rates unchanged in early November, but raise the key lending rate, or the repo rate, by a quarter percentage point in December. The central bank last raised its repo rate, at which it lends to banks, on Sept. 16 by 25 basis points to 6%.