Manufacturing sector growth continues, but rate slows slightly

India's manufacturing expanded at a slower pace for the second month in a row following a drop in new orders and output, backing further away from a 20-month-high hit in February, a survey showed on Monday.

The HSBC Markit Purchasing Managers' Index , based on a survey of 500 companies, fell to 57.2 in April from 57.8 in March, according to a statement from HSBC Holdings Plc and Markit Economics today. A reading above 50 indicates a gain in factory production, and it has been above that level for 13 months.

The data still signalled significant strength in India's manufacturing sector, underscoring the double-digit gains in official industrial output figures in recent months, the survey said.

"Although this slip indicates that operating conditions improved at a weaker rate during the latest survey period, the latest reading still signalled a considerable strengthening in the health of the industry," survey compiler Markit said. "Prices charged for Indian manufacturers rose at a marked pace during April, as firms responded to further growth in their cost burdens in an attempt to defend profit margins."

Output and new orders indexes remained above 60 and employment showed modest growth in April after stagnating the month before, supported by greater production requirements and accelerating economic growth. The output price index rose for a second month in a row to 55.8 from 54.6. It has risen nearly four points since February.

The backlogs of work index spiked to an all-time high thanks to new orders, delays in delivery times and power cuts, suggesting inflation pressures may mount further.