India’s January Manufacturing Activity Hits Near 8 Year High

BENGALURU: India’s manufacturing activity expanded at its fastest pace in nearly eight years in January with robust growth in new orders and output, a private survey showed on Monday, suggesting the economy may be getting back on firmer footing.
In response to the jump in sales, factories hired new workers at the fastest rate in more than seven years.

The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, jumped to 55.3 last month from 52.7 in December. It was the highest reading since February 2012 and above the 50-mark separating growth from contraction for the 30th straight month.
“The PMI results show that a notable rebound in demand boosted growth of sales, input buying, production and employment as firms focused on rebuilding their inventories and expanding their capacities in anticipation of further increases in new business,” Pollyanna De Lima, principal economist at IHS Markit, stated.
Following a sharp improvement in demand, January saw growth of new business, output, exports, input buying and employment. At the same time, business sentiment strengthened and there were softer rises in both input costs and output charges.
A new orders sub-index that tracks overall demand hit its highest level since December 2014 and output grew at its fastest pace in over seven and a half years, pushing manufacturers to hire at the strongest rate since August 2012.
Companies noted the strongest upturn in new business intakes for over five years, which they attributed to better underlying demand and greater client requirements.
The rise in total sales was supported by strengthening demand from external markets, as noted by the fastest increase in new export orders since November 2018.

On the employment front, hiring activity improved in January, with firms increasing employment at the quickest rate in close to seven-and-a-half years. New business growth and projects in the pipeline were cited as the main reasons for job creation.

Meanwhile, both input costs and output prices rose at a slower pace, indicating overall inflation may have eased after hitting a more than five year high of 7.35% in December, although probably not below the Reserve Bank of India’s medium-term target of 4%.
That might keep the central bank, which cut its key interest rate by a cumulative 135 basis points last year, on the sidelines over the coming months.
“To complete the good news, there was also an uptick in business confidence as survey participants expect buoyant demand, new client wins, advertising and product diversification to boost output in the year ahead,” added De Lima.

Lima further said: “To complete the good news, there was also an uptick in business confidence as survey participants expect buoyant demand, new client wins, advertising and product diversification to boost output in the year ahead.”
The Reserve Bank is scheduled to hold its Monetary Policy Committee (MPC) during February 4-6, 2020.

Source: TOI

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