India’s manufacturing sector growth revived in October and hit a 22-month high, driven by a sharp and accelerated increase in new orders, purchasing activity and output. It indicated a robust improvement in manufacturing business conditions. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - climbed to 54.4 in October from 52.1 in September. A reading above 50 in terms of manufacturing performance indicates expansion.
The October data provide positive news for India's economy, as manufacturing output and new orders expanded at the fastest rates in 46 and 22 months, respectively. Once again, consumer goods producers outperformed their intermediate and investment goods counterparts, registering stronger rates of expansion for both output and new orders. In October, output increased for the tenth straight month and at the quickest rate in nearly four years.
Further, the amount of new work received by manufacturers grew markedly during October, with anecdotal evidence linking the latest rise to improved underlying demand. Data indicated that although foreign orders contributed to the upturn in total new work, the rate of growth in new business from abroad eased to a three-month low. The overall rate of accumulation was solid and the quickest in almost three years, with survey members reporting capacity pressures. In spite of this, businesses left employment unchanged. Survey participants reported higher prices across a wide range of goods, but particularly highlighted steel, plastic and petrol.