A weaver uses a handloom to make a silk saree in a workshop at night in Varanasi, Uttar Pradesh. (Photographer: Dhiraj Singh/Bloomberg)

India’s Manufacturing Activity Improves At Its Fastest Pace In 13 Months

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India’s manufacturing activity improved at the fastest pace in 13 months on new orders and lower tax rates.

The Nikkei India Manufacturing Purchasing Managers’ Index stood at 52.6 in November compared to 50.3 in October, according to a statement by Markit. That’s the fourth straight month of growth. A reading below 50 indicates contraction and a number above it signals expansion.

The upward movement was driven by a "marked increase in output" on account of higher order book volumes and a fall in tax rates under the Goods and Services Tax regime, the report said.

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.
Aashna Dodhia, Economist, IHSMarkit   

Improved manufacturing activity reinforces the revival in India's gross domestic product growth. It bounced back from its three-year low to 6.3 percent in the September ended quarter.

Factory employment rose in November with manufacturers raising their payroll numbers at the sharpest rate since September 2012, the report said.

Also Read: Indian Economy Recovers In Q2, But Slowly

At the same time, inflationary pressure also increased with inputs costs rising to the highest level since April. Chemicals, steel and petroleum prices saw an uptick while overall input prices rose at a stronger rate. According to anecdotal evidence, firms were able to completely pass on the higher cost to customers, the report said. Manufacturers, however, attempted to replenish their stocks by purchasing greater quantities of raw materials and semi-finished items in November.

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