Manufacturing reaches top in 7 months, says HSBC study

India's manufacturing sector in December climbed to its highest level since May 2009 signalling a faster monthly improvement in the key economic activity, an HSBC survey said today.

"December data pointed to a substantial increase in new business received by Indian manufacturers. Growth was the most marked for 15 months," the HSBC Markit Purchasing Managers' Index (PMI) said.

Demand from both domestic and foreign sources rose since November "although the home market remained the main driver of total new business expansion," it said.

Manufacturers raised production for the nine straight month at a considerable pace, the PMI said.

Commenting on the survey, HSBC Senior Asian Economist Robert Prior-Wandesforde said, "Concerns that growth in India's manufacturing sector was taking a decisive turn for the worse should be allayed by this impressive release".

He said rise in the new export orders index suggests that external demand is playing a key role in driving output.

However, most of the manufacturing companies remain cautious about the durability of the recovery and remain "reluctant to hire workers", Prior-Wandesforde said.