India's manufacturing activity improved in the last month of 2019 as a “solid rise” in factory orders boosted production growth.
The Nikkei India Manufacturing Purchasing Managers' Index rose to 52.7 in December from 51.2 in November, according to a statement. This was the 29th straight month when India's manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
The improvement was driven by new orders that rose at the fastest pace since July, leading to higher production and hiring efforts. Indian manufacturing output rose at a marked pace in December, a joint fastest rate in 10 months, the press statement said.
“Factories benefited from a rebound in demand, and responded by scaling up production to the greatest extent since May. There were also renewed increases in input purchasing and employment during December,” said Pollyanna de Lima, principal economist at IHS Markit.
“The uptick in Indian manufacturing sector growth signalled by the latest PMI results will be welcomed by policymakers, particularly given the concerning results observed in October,” she said.
But she cautioned against the state of sentiment. “The degree of optimism signaled at the end of 2019 was the weakest in just under three years, reflecting concerns over market conditions, which could restrict job creation and investment in the early part of 2020.”
The improvement in manufacturing activity comes days after data showed that India's core sector output contracted for the fourth straight month in November, albeit at a slower pace.
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