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The HSBC Purchasing Manager Index (PMI) in August slipped a tad to 52.4 from 53 in July. However, despite the drop, for the tenth straight month operating conditions in the country have improved, with output and new orders continuing to grow, HSBC said.
The fall in PMI in August was because the capital goods (heavy machinery) sector saw a deterioration in business conditions. The consumer goods performed the best.
The PMI is a measure of factory production and is based on data compiled from monthly replies to questionnaires sent out to purchasing executives in around 500 manufacturing companies. An index above 50 shows expansion, while a number below that indicates a decline.
“The mood remains positive, too, with firms accumulating inventory in response to stronger demand. However, price pressures remain 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,” said Frederic Neumann, Co-Head of Asian Economic Research at HSBC.
Better conditionsThe latest survey noted an improvement in the operating conditions as output growth was good and companies received good orders from domestic and international buyers. However, it pointed out that employment had declined for the second consecutive month.
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