Mfg activity at 14 month high on sharp rise in sales

Manufacturing activity in India improved at a 14-month high in February, accelerated by an increase in sales which fuelled growth of output and employment, a private survey showed on Friday.The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 54.3 in February, up from 53.9 in January. A reading above 50 on this index indicates expansion and below that mark, contraction.For FY19, IHS Markit, which compiles the report, has revised upwards its gross domestic product (GDP) growth forecast, from 7% to 7.1%. This is higher than the official growth forecast for FY19 which was revised downwards on Thursday to 7% from 7.1% earlier.The higher revision has been done amid the announcement of fiscal stimulus for the new interim budget and the policy rate cut announced in February, according to Pollyanna De Lima, Principal Economist at IHS Markit and author of the report.“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 favourable path,” De Lima said.The statistics office expects manufacturing to grow 8.1% in FY19.As per the survey, growth of total order books was supported by gains from international sources, as seen by a marked and accelerated upturn in new export work.The survey report showed that 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.

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