India’s manufacturing production has expanded at the strongest pace in five years in December, according to the Nikkei India Manufacturing Purchasing Managers’ Index released by IHS Markit on Tuesday.
The Purchasing Managers’ Index rose to 54.7 in December, from 52.6 in November, as growth was recorded across all three monitored categories of consumer, intermediate and investment.
“The overall upturn was supported by the sharpest increase in output and new orders since December 2012 and October 2016, respectively,” the survey said.
Job creation rose to its highest since August 2012 with the greater inflow of new business, it added. The rise in output and new orders also allowed firms to raise prices at the fastest pace since February.
Aashna Dodhia, Economist at IHS Markit, said that there was a stronger market demand from home and international markets. “Challenges remain as the economy adjusts to recent shocks, but the overall upturn was robust compared to the trend observed for the survey history.”
The Goods and Services Tax regime “continued to lead to greater raw material costs, with input cost inflation accelerating to the sharpest since April”, the economist said. Moreover, as consumer spending recuperated, firms were restricted in their ability to pass on higher cost burdens to clients. This “placed an upward pressure on firms’ margins”, Dodhia added.