After hitting its lowest level since February 2009 in the previous month, India’s manufacturing activity rebounded in the month of August, aided by rise in new orders and output across the country. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance- stood at 51.2 in August, as compared to 47.9 in July, signaling a renewed improvement in the health of the sector.
As per survey data, new work witnessed rise due to a better understanding of the new taxation system, alongside greater promotional activities and a pick-up in demand. Though the growth in factory orders remained moderate, it was the quickest since May. Besides, new export business also rose but at the slowest pace in the current three-month period of growth. There was broad-based recovery, with factory orders and production up in each of the three monitored sub-sectors. Companies responded to the improvement in operating conditions by creating jobs and purchasing additional raw materials and semi-finished items.
On the inflation front, the report said that output prices rose in August as companies attempted to pass through to their clients ongoing increases in cost burdens. However, input cost inflation softened to a one-year low as the introduction of the Goods and Services Tax (GST) reportedly led to higher prices for some materials and cheaper rates charged for other items. The report also noted that manufacturers hired extra staff at the fastest pace since March 2013 in order to cope with higher workloads.