Manufacturing PMI Rises In October On Robust Order Flow

India's manufacturing sector activity improved in October, as firms scaled up production and employment levels amid strong rise in new business order flows.

The Nikkei India Manufacturing Purchasing Managers' Index strengthened to 53.1 in October from 52.2 in September as new orders and production increased at the quickest rate in four months.

This is the 15th consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

New orders increased at a sharp rate during October and panellists attributed this rise to successful advertising efforts, strengthening underlying demand and competitive price-setting. The rise in new order flows was the fastest since June.

"A combination of domestic and foreign orders fuelled the upturn in overall activity, although export orders displayed the slowest expansion since July, total new work rose at the sharpest pace since mid-year," said Pollyanna De Lima, Principal Economist at IHS Markit and author of the report.

Manufacturers stepped up hiring in October to meet rising demand conditions; and job-creation during the month was the strongest since last December.

Notwithstanding that, Indian manufacturers were confident that output will be higher over the course of the next year and they increased their marketing activity and investment in research and development. The level of optimism was stymied by concerns towards future market conditions.

On the price front, there was upward inflationary pressure amid reports of higher prices for chemicals, energy and metals, average cost burdens increased and some manufacturers passed part of the additional cost burden on to their clients by hiking their charges.