Manufacturing PMI rebounds from note ban downturn

 Manufacturing sector rebounded from demonetisation downturn in January amid rising order books, production as well as buying levels and the expansion in the sector is likely to pick up pace in coming months, says a monthly survey.

The Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) — an indicator of manufacturing activity — increased to 50.4 in January from 49.6 in December. A reading above 50 indicates expansion while any score below the mark denotes contraction.

“The Indian manufacturing economy recovered from the one-off downturn that hit the sector in December following the withdrawal of high-value banknotes,” said Pollyanna De Lima, Economist at IHS Markit and author of the report.

The main factors contributing to the PMI reading were growth of both new orders and output as market conditions returned to normal and led to subsequent improvement in demand. IHS Markit forecasts a 6.9% growth in GDP for 2015-16, anticipating an acceleration to 7.4% in 2016-17.

On the prices front, input cost inflation climbed to its highest mark since August 2014, while output charges were raised for the 11th successive month.