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.

Global PMI dips below 50 : Markit

At 49.9 in September, down from 50.2 in August, the JPMorgan
Global Manufacturing  PMI™ posted below the neutral 50.0
mark for the first time since June 2009.
The per formance of   the global  manufactur ing sector  has
weakened noticeably since the start of the year. Over Q3 2011
as a whole, production growth was negligible and down sharply
f rom Q1's  recent  peak.   Incoming new work,  meanwhi le,
contracted for the first time since Q2 2009.
September saw new orders contract at the fastest pace 28
months, meaning that manufacturers depleted backlogs of
work to the greatest extent in almost two-and-a-half years just
to hold production steady at its August level. International trade
flows have also fallen in recent months.
September saw production expand in the US and the UK,
following slight reductions in August. China reported a further
slight expansion, while growth in India slowed sharply to its
weakest in the current two-and-a-half year period of increase.
Output declined in the Eurozone, Japan and Brazil.
The level of incoming new work fell for the third consecutive
month  in September.  Among  the major   indust r ial  nat ions
covered by the survey, new orders declined in the US, the
Eurozone, China, and Japan. All of the euro area member
states for which data are collected saw a contraction.
New export orders declined for the second successive month
in September. Reductions were seen in the Eurozone (steepest
since June 2009), Japan (fastest for five months), China, the
UK and Brazil (both the most marked since May 2009), India,
Russia, Taiwan, Poland and Australia. Within the euro area,
all nations reported lower levels of new export business. In
contrast, the US saw growth in foreign demand improve from
August's two-year low. Canada, the Czech Republic and Turkey
also reported increases.
Manufacturing employment increased for the twenty-second
straight month in September. However, the average rate of
jobs growth over Q3 2011 was the least marked since the final
quarter of 2009. The latest survey period saw staffing levels
increase in the US, the Eurozone (but driven almost entirely by
Germany), Japan, Canada, Eastern Europe, Switzerland,
Taiwan and Turkey. Job losses were seen China, the UK, India,
Russia, Brazil, South Africa and Australia.
September saw average input prices rise at the same pace
as August's 13-month low. Cost inflation continued to ease in
developed markets, whereas emerging nations saw input
prices rise at the fastest pace in four months.

India's Manufacturing Slips by 2 Points in September

India's manufacturing growth nearly stalled in September, turning in its weakest showing since March 2009 on slowing output and order growth as a year-and-a-half of interest rate increases and weakening global conditions take a toll on Asia's third-largest economy.

The HSBC Markit India Manufacturing PMI fell more than two points to 50.4 from 52.6, close to the 50 mark dividing growth and contraction. The output index plunged by its biggest amount in one month since November 2008, to 51.1 from 56.0.

The new orders index, a gauge of future output, fell for the sixth straight month, while export orders contracted for a third month on weak global demand.

"Growth momentum in India's manufacturing sector eased further in September. This was driven by weaker orders, with export orders still contracting due to the weaker global economic conditions," said Leif Eskesen, economist at HSBC.

With developed economies perilously close to another recession, emerging markets, which have provided the motor for global growth in recent years, are also facing a crunch.

China's official purchasing managers' index inched up to 51.2 from August's 50.9, largely in line with a median forecast of 51.3 in a Reuters poll, data on Saturday showed.

India's factory sector has gone from robust growth to near stall speed in just five months and the survey suggested more weakness lies ahead. Domestic car sales fell 10 percent in August from a year earlier after surging 30 percent in the most recent fiscal year.

India's economy grew at 8.5 percent in the fiscal year that ended in March but growth in the June quarter fell to 7.7 percent, with some economists predicting sub-7 percent growth in coming quarters.

India's exports rose 44.25 percent to $24.3 billion in August from a year earlier, although that is slower than the 54.2 percent annual growth clocked during the April-August period.

"The slowdown in real economic activity is probably just over half done, really, and weak numbers like this are not surprising," said Philip Wyatt, a Hong Kong-based economist with UBS.

Inflation pressures were slightly less intense than in August, the PMI survey showed, but still remain.

"While the persistent inflation pressures support RBI's tightening bias, the slowdown in manufacturing growth suggests that the end to the tightening cycle is at least now in sight," said Eskesen.

The Reserve Bank of India (RBI) is faced with near double-digit inflation which it has tried to control through a dozen interest rate hikes over 18 months. Indian inflation climbed to 9.78 percent in August from a year ago, its highest in 13 months.

Economists in a Reuters poll expect the RBI to raise its key interest rate one more time in 2011 to 8.50 percent, although weakening domestic and global conditions may prompt it to refrain from further raising rates at its next review on Oct. 25.

Monthly headline inflation is due to be announced on Oct. 14, two days after the release of industrial production data.

"No doubt growth is slowing down. The latest PMI numbers are evidence of that. But RBI's focus is likely to remain on inflation," said Vivek Rajpal, India rates strategist at Nomura.