India's manufacturing activity in January reaches almost the maximum of eight years as orders increase

BENGALURU: India expanded at its fastest pace in almost eight years in January with strong growth in new orders and production, a private survey showed on Monday, suggesting that the economy could be returning to a firmer situation.

In response to the jump in sales, factories hired new workers at the fastest pace in more than seven years.

The Nikkei manufacturing purchasing managers index, compiled by IHS Markit, rose to 55.3 last month from 52.7 in December. It was the highest reading since February 2012 and above the 50 mark that separates the growth of the contraction for the 30th consecutive month.

The results of the PMI show that a notable rebound in demand boosted sales growth, the purchase of inputs, production and employment, as companies focused on rebuilding their inventories and expanding their capabilities in anticipation of further increases in The new businesses, Pollyanna De Lima, principal economist at IHS Markit, said.

After a sharp improvement in demand, January experienced a growth in new business, production, exports, purchase of inputs and employment. At the same time, business sentiment strengthened and there were smoother increases in both entry costs and exit charges.

A new sub-index of orders that tracks general demand reached its highest level since December 2014 and production grew at its fastest pace in more than seven and a half years, pushing manufacturers to hire at the strongest rate since August. 2012

Companies observed the strongest improvement in new commercial intakes for more than five years, which they attributed to better underlying demand and higher customer requirements.

The increase in total sales was supported by the strengthening of demand from external markets, as indicated by the fastest increase in new export orders since November 2018.

On the employment front, the hiring activity improved in January, with companies that increased employment at the fastest rate in about seven and a half years. The growth of new businesses and the projects in process were mentioned as the main reasons for job creation.

Meanwhile, entry costs and exit prices increased at a slower pace, indicating that general inflation may have decreased after reaching a maximum of more than five years of 7.35% in December, although it is probably not due to below the 4% medium-term target of the Reserve Bank of India. .

That could keep the central bank, which reduced its key interest rate by 135 cumulative basis points last year, on the margin in the coming months.

To complete the good news, there was also an increase in business confidence, as survey participants expect demand, new customers to win, advertising and product diversification to increase production in the next year, De Lima added .

Lima also said: To complete the good news, there was also an increase in business confidence, as survey participants expect optimistic demand, new customers, advertising and product diversification to boost production in the next year.

The Reserve Bank plans to hold its Monetary Policy Committee (MPC) on February 4 and 6, 2020.