Economy

Manufacturing growth hits 22-month high in Oct

Surabhi New Delhi | Updated on January 15, 2018 Published on November 01, 2016

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Festival demand boosts new orders and output

Indicating a sharp uptick in industrial activity, the Nikkei India Manufacturing Purchasing Managers’ Index TM (PMI) rose to a 22-month peak in October of 54.4 against 52.1 in September.

An index reading above 50 reflects expansion; a marking below it points to contraction.

A Nikkei release on Tuesday attributed the good performance to “stronger contributions from three of its five sub-components: new orders, output and stocks of purchases.” Output in October increased for the 10th straight month and at the quickest rate in nearly four years, it added.

The data for October provide “positive news” for the economy as manufacturing output and new orders expanded at the fastest rates in 46 and 22 months, respectively,” said Pollyana de Lima, economist at IHS Markit and author of the report. The manufacturing sector looks to be building on the foundation of the implied pick-up in growth in the previous quarter, she noted.

Reflecting the higher demand during the festival season, consumer goods registered the strongest rate of expansion in output and new orders, outperforming intermediate and investment goods.

The data also indicated that much of the new orders were from domestic markets; growth in new business from abroad eased to a three-month low.

However, the spurt in business did not translate into new jobs. Manufacturing employment remained unchanged in October, with the index recording exactly 50.

Inputs price rises

The report also noted that the average price of inputs rose sharply in October, with the inflation rate quickening to its fastest since August 2014.

“Survey participants reported higher prices across a wide range of goods, but particularly highlighted steel, plastic and petrol,” it said. Manufacturers passed on some of these costs to clients, it added.

Published on November 01, 2016
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