India manufacturing index dips to 52.8

Blame it on nasty power outages and depressing export demand said HSBC.

According to HSBC, the July manufacturing sector PMI pointed to slower growth in output and new orders, particularly overseas orders. In addition to demand, power outages were partly to blame. Input and output price inflation also eased, but remained well-above trend. With inflation risks lingering despite the slowdown and policy action out of Delhi still missing, the RBI has limited scope to move.

Here's more from HSBC:

HSBC's India manufacturing PMI eased to 52.9 in July (vs. 55.0 in June) due to slower output growth. Panelists blamed power outages for the pull back in output growth. New orders also eased, led in particular by a slight contraction in new export orders.

The slower pace of new order growth helped companies cut back on their backlogs of works, while supplier delivery times held steady. However, manufacturing companies continued to hire, although the pace was more muted.

Stocks of purchases and stocks of finished goods remained broadly unchanged. Meanwhile, quantity of purchases grew at a slower clip in step with the deceleration in new orders.

Input and output price inflation eased but remained well-above trend. Panelists reported rupee depreciation, and higher labor and raw material costs as the main drivers of price increases at the factory gate.

Manufacturing growth slowed a notch as power outages continue to disrupt production. Moreover, unfavorable global economic conditions are weighing on growth.

With orders decelerating more than inventory accumulation, the more moderate pace of growth is likely to continue in coming months, although less disruptions from power outages could lift output.