Factory activity expands at its fastest pace in Dec

Tuesday 09th January 2018 11:25 EST

A survey showed that manufacturing activity expanded at its fastest pace in five years in December on the back of new orders, which point to a a recovery in the economy. The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 54.7 in December from 52.6 in November, the reading was slightly stronger than the average 54 recorded since the inception of the survey in March 2005.

In response to greater inflows of new business, job creation quickened to the greatest since August 2012. On the price front, input cost inflation accelerated to the strongest since April and firms raised their average selling prices at the fastest pace since February, the survey showed. The Nikkei India Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies.

Latest data showed core sector, spanning coal, steel, crude oil, refinery products, steel, cement, fertiliser and electricity, rose a 13-month high of 6.8% in November while car sales grew 9.2% in 2017 compared to the previous year. Economists expect the economy to continue on its recovery path as it emerges from the impact of demonetisation and rollout issues linked to GST. The economy is estimated to grow 7-7.5% in the current fiscal year and then move to a higher growth trajectory.

"Challenges remain as the economy adjusts to recent shocks, but the overall upturn was robust compared to the trend observed for the survey history," said Aashna Dodhia, economist at HIS Markit.

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