Indian P.M.I. Rises to 52.3 % : HSBC India Com. Index

The manufacturing and services sector index, as measured by HSBC India Composite Index, rose sharply to a three-month high in November to 52.3 from 50.3 in the previous month, even though the private sector output rose only modestly, says the HSBC Purchasing Managers Index.

"The HSBC India Composite Index, which covers both the manufacturing and service sectors, posted 52.3, up from 50.3 in October, to a three-month high. The seasonally adjusted business activity index posted 53.2 in November, above the 50.0 no-change threshold that separates growth from contraction.

Nonetheless, the latest rise remains well below the series average," HSBC Purchasing Managers Index (PMI) said here today. Commenting on the PMI survey, HSBC India and Asean chief economist Leif Eskesen said, "the services sector demonstrated resilience, with both activity and new businesses on the rise. Unfortunately, inflation continues to tick up as well, calling for RBI to maintain tight monetary conditions for an extended period."

However, report notes that private sector output rose only modestly in the month but expansion was stronger than the fractional growth seen in the previous two surveys. Moreover, rising from October reading of 49.1, expansion was the first signalled in three months, it said, adding in contrast, output in manufacturing sector rose at the weakest pace in 32 months.

New business received by private sector companies rose for a 31st month in row in November, making it the fastest pace of growth since August, but remained well below the series average. However, the report notes that a stronger expansion in new orders received by the service providers offset a weaker rise in the manufacturing sector.

Indian P.M.I. rises to 52 from 50.4 in September

The HSBC Markit India Manufacturing PMI rose to 52.0 from 50.4 in September, comfortably above the 50 mark which divides growth and contraction.

The new orders index, an indicator of future output, rose after six consecutive declines. The factory output index also jumped to 52.7 after falling for five straight months to 51.1 in September.

“The rate of growth regained some momentum lost in September but was, nonetheless, weak in the context of historical data,” Markit said in the report.

“Expansions of new orders and output supported the overall strengthening of operating conditions. However, new work from export markets continued to fall.”

Official data released last month showed factory output in August rose 4.1% from a year earlier, up from 3.8% in July.

PMI data suggested that based on month-on-month change, September was the worst month for Indian factories since March 2009, when output shrank.

A rebound in global stock markets in October, however, could boost confidence in Asia’s third largest economy.

India’s benchmark stock index, the BSE Sensex, climbed almost 8% in October, after hitting a 20-month low of 15,745 points earlier in the month. World stocks soared around 14% last month.

China’s big factories, meanwhile, ran at their slowest pace in almost three years in October as new orders and exports slowed, but smaller firms are showing signs of a fight back against a deteriorating global backdrop, purchasing managers indexes showed on Tuesday.

China’s official PMI recorded its lowest reading since February 2009, coming in at 50.4 for October compared with September’s 51.2, according to the China Federation of Logistics and Purchasing (CFLP), which compiles the index on behalf of the National Bureau of Statistics.

In India, high interest rates are making it harder for companies to borrow and invest.

The Reserve Bank of India raised interest rates for the 13th time last week since early last year, but signalled an inclination to leave rates on hold in coming months on expectations that persistently high inflation will begin to ease.

Official wholesale price inflation has stayed stubbornly above 9% for 10 consecutive months. The input and output price indexes from the latest India PMI fell slightly but still pointed to high inflation.

Economists in a recent Reuters poll expected Indian inflation to average 8.8% in the fiscal year ending March 2012 before falling to 7% in the following year.

Indian I.I.P ( Indust. Prod. ) data Details

 

Eurozone Contracts, Japan In Recession.,

                                                                                                                                                                                                       Eurozone drifts nearer to stagnation in July, as Germany and France slow further and Spain falls back into contraction
                                                              Data collected 12–26 July.
Key points:
.. Final Eurozone Composite Output Index at 22-month low of 51.1 in July (flash estimate: 50.8).

.. Growth led by France, as Germany slows sharply. Contractions seen in Italy and Spain.

.. Further job creation in Germany and France, while pace of losses eased               outside of the big-two.
                                              Output growth slips closer to stagnation

Having eased sharply in each of the previous three months, Eurozone private sector growth moved closer to stagnation at the start of Q3 2011.
The Final Eurozone PMI® Composite Output Index fell to 51.1 in July, down from 53.3 in June. Although above the earlier flash estimate of 50.8, the final reading was still the lowest since September 2009. Activity has risen throughout the past two years.

Output growth eased in both the manufacturing and service sectors in July. Manufacturing production scarcely rose over the month. Meanwhile, the rate of expansion in service sector business activity was the weakest since September 2009.
The slowdown was broad-based by nation. Rates of expansion were the least marked since October 2009 and August 2009 in Germany and France respectively, and well below those seen in the opening quarter of the year. Further contractions were seen in Italy and Spain. In the case of Spain, the rate of decline was the steepest for 19 months.
                                              Nations ranked by output (July)
                                              France 53.2 23-  month low
                                              Germany 52.5 21-month low
                                              Italy 49.1 2-        month high
                                              Spain 46.1 19-   month low



The principal factor underlying weaker output growth was a near stagnation of inflows of incoming new business. Levels of new work slowed on the back of weakening conditions in domestic markets and the first decline in new manufacturing export business (including intra-Eurozone trade) for two years.
The rate of expansion in new business eased sharply in Germany (weakest in two-year period of growth) and also moderated in France (23-month low). Italy reported a further reduction, while Spain saw new orders fall back into contraction with the steepest rate of decline since the end of 2009.


                 Job creation continues in big-two nations, rates of reduction ease in Italy and Spain


Job creation held up comparatively well in light of the slower expansions in output and new business. Employment rose for the fifteenth month running in July, with the rate of increase only slightly below the average for that period. Payroll numbers rose at both manufacturers and service providers.
The slowdown mainly reflected weaker job creation in Germany. However, Germany still reported the strongest increase in payroll numbers overall, followed at some distance by France (which saw a faster rate of jobs growth than in June). Although further losses were recorded in Italy and Spain, rates of decline eased in both nations.
                                             Output price indices by nation


July saw average input price inflation ease further from March’s 32-month high. Slower cost increases were reported in both the manufacturing and service sectors, with by far the sharper easing seen at manufacturers. Cost inflation slowed in all of the nations covered by the survey.

        
                              Japanese private sector activity falls at solid pace in July

Key points:

.. Composite data signals fifth successive monthly decline in business activity

..  Private sector new work falls only marginally

..   Service sector optimism remains solid

Summary:

              Japanese service providers reported lower business activity for the sixth consecutive month during July, as intakes of new work continued to fall amid weak domestic consumption. Companies further reduced their employee numbers in response. Looking ahead, service providers expressed a solid degree of optimism in the one-year business outlook. Meanwhile, output prices and input costs decreased at marked and marginal rates respectively.

The seasonally adjusted Business Activity Index posted 45.3 in July, down fractionally from 45.4 in June,

China PMI Falls Below 50 and Europe Stagnates---Markit -HSBC Flash PMI

                              HSBC Flash China Manufacturing PMI™
Chinese manufacturing production declines at fastest rate since March 2009
• Flash China Manufacturing PMI™ at 48.9 (50.1 in June). 28-month low.
• Flash China Manufacturing Output Index at 47.2 (49.8 in June). 28-month low.
Data collected 12–19 July.
The HSBC Flash China Manufacturing Purchasing Managers’ Index™ (PMI™) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:
“Headline flash PMI fell below 50 for the first time since July 2010, suggesting slowing momentum of manufacturing activities. This implies that June's rebound in industrial production was just temporary. We expect industrial growth to decelerate in the coming months as tightening measures continue to filter through. That said, resilience of consumer spending and continued investment in a massive amount of infrastructure projects should support a nearly 9% rate of GDP growth in the rest of the year.”
                                          Markit Flash Eurozone PMI
               Eurozone growth slows to near-stagnation in July----- Markit PMI

    Flash Eurozone PMI Composite Output Index(1) at 50.8 (53.3 in June). 23-month low.
􀂃 Flash Eurozone Services PMI Business Activity Index(2) at 51.4 (53.7 in June). 22-month low
􀂃 Flash Eurozone Manufacturing PMI (3) at 50.4 (52.0 in June). 22-month low.
􀂃 Flash Eurozone Manufacturing PMI Output Index(4) at 49.5 (52.5 in June). 2-year low.
                                         Data collected 12-20 July
The Markit Flash Eurozone PMI® Composite Output Index, based on around 85% of usual monthly replies, fell from 53.3 in June to 50.8 in July. The latest reading was the lowest since August 2009 and signalled a near-stagnation of private sector output, the rate of growth having slowed sharply in each of the past three months. The month-on-month fall in the Output Index in July was the largest since November 2008.
 ***Manufacturing output declined – albeit only marginally – for the first time since July 2009, while activity growth slowed sharply in services to the weakest since September 2009.
The deterioration in the survey’s output indicators reflected weaker order book trends. Across both sectors, new business showed only a very marginal increase in July, registering the smallest rise since demand for goods and services first started growing again back in September 2009. Levels of incoming new business fell in manufacturing for the second month in a row, declining at the fastest rate since June 2009 – with new export orders dropping for first time since July 2009. Service sector new business meanwhile showed the weakest rise since November 2009, the rate of growth having lost almost all of the strong momentum seen earlier in the year.

Forward-looking indicators failed to improve. Expectations of service sector activity in the coming year were unchanged compared to June – which had seen the lowest level of optimism since July 2009. At the same time, the ratio of manufacturing new orders to inventories, which acts as a guide to near-term output developments, fell to the lowest since April 2009.
The rate of expansion across both sectors slowed in both Germany and France, dropping especially sharply in the former. Germany saw the weakest rate of growth in two years, while French growth was the slowest since August 2009. Elsewhere, outside of the two largest countries, output fell for the second successive month, and at the steepest rate since August 2009.
Employment growth held up well in the face of the near-stagnation of both output and order books, running below the rate seen earlier in the year but up marginally compared with June. Minor upturns in the rate of job creation were seen in both manufacturing and services, with the former continuing to see the stronger rate of growth. Staffing levels rose in France and Germany, but fell overall across the rest of the region.
Backlogs of work fell for the first time since November 2009. Although only slight, the decline suggests that headcounts may be reduced in coming months unless inflows of new work revive. Manufacturers reported a steeper drop in outstanding work than service providers.
Price pressures eased during the month. Average prices charged for goods and services rose at the weakest rate for six months, while input price inflation across the two sectors dropped to a 12-month low.