Indian manufacturing growth holds at a nine-month low in September

New Delhi: Indian manufacturing growth held at a nine-month low in September, a private survey showed, as Prime Minister Manmohan Singh seeks to counter the nation’s economic slowdown with a policy overhaul.

The purchasing managers’ index remained at 52.8 last month, HSBC Holdings Plc and Markit Economics said in a statement today. A number above 50 indicates growth.

Singh’s government cut diesel subsidies last month to limit a fiscal deficit and opened the nation to more investment, part of a revamp aiming to counter the weakest economic expansion since the global recession in 2009. India’s room to lower interest rates to bolster spending at home has been limited by the fastest inflation among the biggest emerging markets.

“The tactic seems to be not to touch interest rates until inflation comes down,” Prasanna Ananthasubramanian, an economist at ICICI Securities Primary Dealership Ltd. in Mumbai, said before the release. The government’s measures in the past few weeks have improved sentiment, he said.

The rupee has strengthened about 5 per cent versus the dollar since September 13, the most among major currencies, as the government raised diesel prices and paved the way for more overseas investment in the retail, aviation, energy and broadcast industries. It rose 0.2 per cent to 52.7675 per dollar as of 10:39 a.m. in Mumbai.

The changes snapped months of political gridlock over how to spur expansion. The deadlock had stoked concern that the outlook for Asia’s third-largest economy was dimming.

Indian gross domestic product rose 5.5 per cent in the three months through June from a year earlier, holding close to the three-year low of 5.3 per cent in the first quarter. Headline inflation accelerated to 7.55 per cent in August, the fastest in the BRIC group of largest emerging nations that also includes Brazil, Russia and China.

Manufacturing PMIs from HSBC and Markit for China, Taiwan and Vietnam showed contractions in September, while the gauge for Indonesia signaled slower growth.