RTTNews - India's manufacturing activity continued to expand in August, but at slightly slower pace, boosted by domestic demand, a survey by Markit Economics and HSBC said Tuesday.

The purchasing managers' index, which measures the overall health of the manufacturing sector, stood at 53.2 in August, but slightly down from 55.4 in July.

Total new incoming business climbed for the fifth consecutive month, largely driven by the domestic market as the export market remained subdued. Output continued to rise, although the growth slowed slightly in August.

Reflecting the rise in new orders and output, firm increased purchase of inputs and added to the total stock of raw materials. Average vendor performance improved in the month, after deteriorating in the previous two months.

With demand for inputs rising, firms reported a sharp rise in input prices, with the corresponding inflation accelerating to its fastest pace since September last year. However, selling prices remained unchanged from July, as competitive pressures forced firms to shoulder their greater cost burdens, thereby suggesting profit margins were being squeezed.

Commenting on the latest PMI data, Robert Prior-Wandesforde, Senior Asian Economist at HSBC said the slower growth in the index was more likely to represent a a pause for breath than a peaking out of the industrial cycle.

Moreover, the economist said there was still plenty more to come through to the economy in the form of monetary and fiscal stimulus measures. At the same time, he also said we remain hopeful that exports, particularly to the rest of Asia, will recover shortly.

For comments and feedback: contact editorial@rttnews.com