Indian Manufacturing Activity jumps in December

When most of the other emerging and developed nations are struggling with manufacturing activity contraction, Indian Manufacturing activity continues to surprise with smart growths. India-s manufacturing activity, measured by the HSBC Markit India Manufacturing Purchasing Managers- Index (PMI) jumped to 54.2 in December compared to 51 in November. This is its biggest jump in PMI data since last 6 months.India-s PMI data has been continuously staying above 50 level which segregates growth from contraction. PMI data of 54.2 indicates strong growth in the manufacturing activity.

At the same time, manufacturing PMI data were well below the 50 level for euro zone and some developed as well as emerging economies. This growth in manufacturing activity was in spite of high inflation and high interest rate in the domestic market which shows strong fundamentals for Indian industrial sector.

With Food inflation falling to 4-year low level of 0.81% and headline inflation expected to drop steeply for the previous month, RBI may now cut interest rate in order to boost economic and industrial growth. This is very important to cut interest rates now for Indian industrial sector when the IIP fell by 5.1% in the previous month.