Showing a slight moderation in the manufacturing activity, the HSBC Purchasing Manager's Index (PMI) has recorded 52.4 in August which is a little lower than 53 in July.

This index is a measure of factory production and based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 500 manufacturing companies. Index above 50 shows expansion, while below 50 indicates decline.

Although the survey noted improvement in operating conditions in August as output growth was good and companies received good order from domestic and international buyers. However, employment saw a decline for second consecutive month. Among various sectors, consumer goods sector performance was best, while capital; goods (heavy machinery) sector witness business conditions deteriorated.

“The mood remains positive, too, with firms accumulating inventory in response to stronger demand. However, price pressures remained elevated, despite the slight deceleration seen in input prices. This is likely to keep the central bank guarded against inflation risks, particularly from the pick-up in demand,” Frederic Neumann, Co-Head of Asian Economic Research at HSBC, said.

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