Indian manufacturing industry saw a solid rise in activities at the start of 2020, as new business, output, exports, input buying and employment gathered speed. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance -surged to 55.3 in January from 52.7 in December, its highest level in just under eight years.
The report found that the rise in total sales was supported by strengthening demand from external markets, as noted by the fastest increase in new export orders since November 2018. Manufacturers particularly noted higher sales to clients in Asia, Europe and North America, with favourable exchange rates assisting the upturn. In response to the pick-up in demand, Indian goods producers scaled up production in January. Moreover, the rise was the strongest in over seven-and-a-half years, with the rate of expansion much higher than its long-run average.
Further, hiring activity improved in January, with firms increasing employment at the quickest rate in close to seven-and-a-half years, on account of new business growth and projects in the pipeline. With capacities being expanded by further hiring, companies were able to stay on top of their workloads. Unfinished business was broadly unchanged in January, ending a six-month sequence of accumulation.
On the price front, there were slower increases in both input costs and factory gate charges. While some firms reported higher prices for metals, textiles and food, others noted lower fees for copper, packaging materials and rubber. For the third month in a row, the rate of charge inflation surpassed that seen for costs. Meanwhile, Indian manufacturers were more upbeat about the year-ahead outlook for production.
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