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Indian manufacturing registers strongest growth in December

By Niranjan Mudholkar,

Added 02 January 2018

Job creation quickened to the greatest since August 2012!

The Indian manufacturing sector ended the year on a strong note, with operating conditions improving at the strongest rate in five years. The overall upturn was supported by the sharpest increase in output and new orders since December 2012 and October 2016 respectively.

In response to greater inflows of new business, job creation quickened to the greatest since August 2012. On the price front, input cost inflation accelerated to the strongest since April and was marked overall. Subsequently, firms raised their average selling prices at the fastest pace since February.

At 54.7 in December, the Nikkei India Manufacturing Purchasing Managers' Index® (PMI®) rose from 52.6 in November. This was consistent with the strongest improvement in the health of the sector since December 2012. Notably, the PMI reading was slightly stronger than the average (54.0) recorded since the inception of the survey in March 2005. At the broad market group level, growth was recorded across all three monitored categories (consumer, intermediate and investment).

The upward movement in the headline index was driven by a sharp increase in output. Furthermore, the rate of expansion quickened to the strongest since December 2012. Higher order book volumes and improved underlying demand conditions reportedly contributed to greater production. Notably, the rate of growth outstripped the trend seen since the start of the survey.

New orders placed at Indian manufacturers rose for the second month in succession during December. Furthermore, the rate of growth quickened to the sharpest since October 2016. According to anecdotal evidence, new business inflows were underpinned by greater demand from home and international markets. In turn, new export orders rose at the quickest pace since June. Resulting from improved demand conditions, Indian manufacturers upped their staffing levels at the end of the year. In fact, job creation accelerated to the strongest since August 2012.

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