India’s Manufacturing PMI At A 22-Month High In October
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India's manufacturing activity rose for the tenth straight month to a 22-month high in October led by a sharp increase in new orders, purchasing activity and output.
The Nikkei India Manufacturing Purchasing Managers' Index – compiled by Nikkei and research firm Markit – stood at 54.4 in October compared to 52.1 in September.
New orders rose significantly in October, pointing to strength in underlying demand. While foreign orders continued to contribute to the upturn in total new work, the rate of growth in new business from abroad eased to a three-month low.
Consumer goods producers outperformed their intermediate and investment goods counterparts, registering stronger rates of expansion for both output and new orders, showed the data.
Along with a pick-up in demand, the report also threw up the possibility of an increase in manufacturing inflation.
The average price of inputs rose markedly during October, with the rate of inflation quickening to the fastest since August 2014. Survey participants reported higher prices across a wide range of goods, but particularly highlighted steel, plastic and petrol. The rate of output price inflation was the fastest in six months, but modest in the context of historical data, said the release.
Part of the increase in cost burdens was passed on to consumers by way of higher selling prices, which islikely to continue on an upward trend as we head towards the year end.Pollyanna De Lima, Economist, IHS Markit and author of the report
Other Key Factors
- The rate of inventory depletion was modest and little-changed since September.
- Buying levels grew at the strongest rate in 14 months, while stock levels increased at the fastest pace since July 2015.
Core Sector Performance Improves
The improved manufacturing performance follows a pick-up in India's core sector output which grew at 5 percent in September compared to 3.2 percent in August.
The improvement was led by buoyancy in sectors like petroleum refinery, steel and cement where production grew 9.3 percent, 16.3 percent and 5.5 percent respectively.
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