India's Manufacturing Is Strongest In 18 Months

Oct. 3, 2006
Strong domestic as well as overseas demand push index higher.

The Purchasing Managers' Index (PMI) reported on Oct. 2 that India's manufacturing sector grew at its strongest pace in 18 months. The seasonally-adjusted Purchasing Managers' (PMI) rose to 59 in September, up from 57.9 in August, its highest level since data was first collected in April 2005, as reported by India Infoline News Service. Strong domestic as well as overseas demand was cited as factors for the increase.

PMI readings above 50 signal an improvement in business while readings below 50 shows deterioration.

Input prices index jumped to a 17-month high of 61.2 in September from 60.4 in August driven by higher raw materials costs. The output prices index declined to 54.5 from 55.9.

"High input cost inflation suggests that downward pressures on company margins are still alive. However the strong growth in sales volume reflected in the PMI output index should compensate for this," Abheek Barua, chief economist at ABN Amro Bank said in a statement.

The output index rose to 63.8 in September from 61.9 in August, helped by new orders and strong demand. The seasonally adjusted new orders index rose to 65.2 in September from 63.1 in August helped by rising demand from domestic and foreign clients.

The index of export orders eased marginally to 57.7 from 57.8 in August. The stocks of finished goods index signaled a modest rise in post-production levels, while the backlog of work index rose to 52 in September from 52.1 in August.

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