Activity in India's manufacturing sector has gathered momentum, improving at the fastest pace in the year so far. A statement by IHS Markit has shown that the Nikkei India Purchasing Managers Index improved 53.1 in June from 51.2 in the previous month. A reading below 50 indicates contraction in activity, while a number above it signals expansion. Aashana Dodhia, economist at the research firm, said, “India's manufacturing economy closed the quarter on a solid footing against a backdrop of robust demand conditions.” Output growth was seen across all segments and key international markets also reported stronger demand, IHS Markit added.
Participants in the PMI survey cited strong underlying demand conditions as the reason for the pick up in manufacturing activity. New orders from the overseas markets also showed strong growth and accelerated at the fastest pace since February. Manufacturing firms also raised their staffing levels, with job creation at its strongest since the beginning of the year. The statement said, “Jobs growth was evident across consumption, intermediate and investment goods.” Strengthening demand allowed businesses to pass on higher input costs. Input cost inflation was the sharpest since July 2014, leading to output costs rising at the fastest pace since February. “Thus,” Dodhia noted, “The central bank could remain under pressure to tighten monetary policy.”
