In a positive surprise, India’s manufacturing sector growth touched a thirteen-month high in November, driven by an 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 52.6 in November from 50.3 in October. A reading above 50 in terms of manufacturing performance indicates expansion.
In the month of November, the amount of new work received by manufacturers grew at fastest rate since October 2016, however capital goods market group could not catch this growth rate. Besides, new export business also rose for the first time in three months, but at marginal rate. As per survey report, a combination of higher order book volumes and a decrease in GST rates, has led to greater production and firms responded to the improvement in operating conditions by creating jobs and purchasing greater quantities of raw materials and semi-finished items in November.
Rising input costs, which grew at the fastest pace since April, remained the biggest concern for the manufacturers as increasing raw material prices including that for chemicals, steel and petroleum products, added upward pressure on output prices. However, the report found that intensive competitive conditions restricted the firms to fully pass on higher cost burdens to customers, resulting in marginal output charge inflation.
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