A worker uses a cutting torch in a workshop in a steel and iron market in India. (Photographer: Prashanth Vishwanathan/Bloomberg)

India’s Manufacturing Activity At Four-Month Low In February

Manufacturing activity in India fell to a four-month low as factory output and new business orders rose at a slower pace.

The Nikkei India Manufacturing Purchasing Managers’ Index – compiled by Nikkei and research firm Markit – stood at 52.1 compared to 52.4 in January. This is for the seventh consecutive month that the index remained above the 50-point-mark that signals expansion.

While the output rose on the back of new client wins and favourable economic conditions, the business activity expansion was below the below the long-run average of 54.1. Even the increase in output was slower than the preceding months.

The expansion was primarily driven by a marked rise in manufacturing production, whilst there were reports of improved underlying demand, with domestic and external sources driving new business gains.
Aashna Dodhia, Economist, IHS Markit 
India’s Manufacturing Activity At Four-Month Low In February

The continuous improvement in manufacturing and business activity is reassuring of the country’s recovery from implementation of the Goods and Services Tax, the statement said. The gross domestic product is also expected to gain pace in the third quarter with economists expecting a 7 percent growth figure compared with a 6.3 percent in the previous quarter.

Key Highlights

  • Cost Inflation accelerated to the sharpest since February 2017, adding to inflationary pressure.
  • Average selling prices rose at the fastest pace in a year.
  • CPI forecast upgraded to 5.2 percent for the current financial year on rising oil prices.
  • Indian manufacturers remained optimistic on the 12-month outlook for output due to better demand.