'Manufacturing hit by slowdown in domestic demand'

India's manufacturing sector decelerated marginally in December as a slowdown in domestic order flows led to slower production growth, an HSBC survey said.

The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, fell to 50.7 in December from 51.3 in the previous month. The HSBC survey and weak global markets hit the benchmark Sensex which witnessed its biggest drop in six weeks.

The PMI index, which gauges business activity in factories but not its utilities, spent three months below the 50 mark that separates growth from contraction before rising above it in November.

"Manufacturing activity decelerated slightly in December as a slowdown in domestic order flows led to slower output growth," said Leif Eskesen, a chief economist at HSBC.

"Today's numbers show that growth remains moderate and struggles to take off due to lingering structural constraints." While overseas orders came in at a faster pace last month, domestic demand took a hit from the struggling economy. A sub-index measuring overall new orders fell to 51.3, from 51.9 in November. That prompted firms to decrease the pace of output growth last month.

A long struggle to contain inflation with high interest rates and fragile global demand have put India in a rut of slowing growth.

heading south

* The HSBC Manufacturing PMI fell to 50.7 in December from 51.3 in the previous month

* The index, which gauges business activity in Indian factories but not its utilities, spent three months below the 50 mark before rising above it in November

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