<div>Indian factory activity expanded in June at its quickest pace since February while output prices rose at the fastest rate in eight months, signalling a further rise in inflation that is bound to vex the Reserve Bank of India (RBI), a business survey showed on Tuesday (01 July).<br /><br />The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, advanced to 51.5 in June from 51.4 in May. A figure above 50 indicates expansion.<br /><br />A jump in new export orders pushed the output sub-index to 52.4 from 51.7 in the previous two months.<br /><br />"Things are gradually improving in India's manufacturing sector. Output picked up in June, supported by growing order flows, especially from overseas," said Frederic Neumann, co-head of Asian economic research at HSBC.<br /><br />But domestic demand remained weak, hurting jobs growth.<br /><br />"The muted pace will suit the RBI: since input and output prices are rising as well, faster growth would only stoke inflation and require tightening," added Neumann.<br /><br />The survey showed firms passed on a greater cost burden to consumers. Prices charged rose at their fastest pace since October.<br /><br />After May wholesale price inflation hit a five-month high any further move up would put pressure on the RBI to leave interest rates on hold for longer or even to raise them.<br /><br />(Reuters)</div>
