India’s manufacturing output rose in November at its fastest pace in 13 months, as economic activity continues to recover after the lull caused by demonetisation and the rollout of the Goods and Services tax regime. The monthly Purchasing Managers’ Index for manufacturing, released by IHS Markit, rose to 52.6 from 50.3 in October, beating market estimates.
A reading above 50 denotes an expansion in activity. The manufacturing sector has now expanded for the fourth month in a row, after falling to 47.9 this July. A below-50 figure indicates contraction in output. The July index, hit by the implementation of GST, was the lowest in over eight years.
Creation of jobs in the manufacturing sector was fastest since September 2012, IHS Markit said.
“India’s manufacturing economy advanced on its path to recovery as disruptions from the recent tax reform continues to diminish,” said Aashna Dodhia, economist at IHS Markit. “Growth in output and new orders picked up to the fastest since October 2016, reportedly supported by reductions in GST rates and stronger underlying demand conditions.”
The government had revised tax slabs for several goods and services in November. The new tax rates came into effect from November 15.
Economic growth data for the July-September quarter, released on Thursday, had also shown that the economy could now be recovering. India recorded a growth rate of 6.3% in its Gross Domestic Product during the second quarter of the 2017-’18 financial year, reversing a five-quarter slowdown.