At 54.3 in February, up from 53.9 in January, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) reached a 14-month high. The latest figure was consistent with a robust improvement in business conditions that was stronger than seen on average over the 14-year survey history.
The health of the Indian manufacturing sector strengthened further in February, with a sharp and accelerated increase in sales boosting the growth of output and employment. There was a solid rise in input buying and a modest accumulation in preproduction inventories, but stocks of finished goods decreased as firms utilized them to fulfill orders. Rates of both input cost and output charge inflation remained subdued by historical standards, despite picking up from January.
Amid reports of successful advertising efforts, supportive government policies and strengthening demand conditions, inflows of new work at Indian goods producers continued to expand during February. The increase was the sixteenth in as many months and the most pronounced since October 2016.
The growth of total order books was supported by gains from international sources, as seen by a marked and accelerated upturn in new export work. A number of panelists indicated the acceptance of bulk orders from clients in key export destinations.
Manufacturing output rose at the quickest rate since December 2017, boosted by strong inflows of new business, technological progress, beneficial public policies, and positive market conditions.
Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Principal Economist at IHS Markit and author of the report said, “The Indian manufacturing sector made further progress midway through the final quarter of FY18, building on the accelerated upturn noted in January. Sharper growth in production and sales were matched by the establishment of new jobs. The upturn in employment was one of the best seen for six-and-a-half years, as goods producers sought to expand output capacities to meet strengthening demand from both domestic and external sources.”
“The survey results suggest that manufacturing will likely provide a stronger contribution to overall economic growth in the final quarter, provided that March’s figures stay on this favorable path. For FY19, IHS Markit has revised higher its GDP growth forecast, from 7.0% to 7.1%, amid the announcement of fiscal stimulus for the new interim budget and the policy rate cut announced in February,” Pollyanna De Lima added.