India's manufacturing activity improved for the eleventh straight month but eased from the 22-month high hit in October.
The Nikkei India Manufacturing Purchasing Managers' Index – compiled by Nikkei and research firm Markit – stood at 52.3 in November compared to 54.4 in October.
Softer expansion in new business inflows, order book growth that was at its slowest since July, and slowing momentum in export orders, weighed on the performance, according to Nikkei and Markit.
The Demonetisation Impact
The withdrawal of higher denomination currency notes by the Narendra Modi government hampered manufacturing growth, the report added. Shortage of cash led to a slowdown in manufacturing activity, with producers of consumer goods recording a sharp slowdown in growth.
Manufacturing employment was largely unchanged for the month.
Other Key Highlights
- Stock levels saw divergence as falling inventories of finished goods contrasted with higher holdings of raw materials and semi-finished items.
- Domestic as well as global clients reported higher demand, but the growth was hampered due to demonetisation.
While three percent of the companies passed on rising costs to their clients, most companies reported unchanged selling prices, the report added.
Although many surveyed companies commentedthat further disruption is expected in the near-term,the demonetisation of the rupee is anticipated toignite growth in the long-run as unregulatedcompanies leave the market.Pollyanna De Lima, Economist, IHS Markit And Author Of The Report
Growth Worries
The Indian economy grew 7.3 percent in the second quarter of the current fiscal year, below the 7.5 percent forecast by economists.
Economic growth could slow down in the second half of the year due to the government's decision to withdraw Rs 500 and Rs 1,000 notes from circulation. Gross domestic product will slump to 6.5 percent over the next quarter, according to the median estimate in a Bloomberg survey of 14 economists.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
