Manufacturing activity in the country rebounded in August with new orders and output returning to growth territory after contracting in July due to the rollout of the Goods and Services Tax. The Nikkei India Manufacturing Purchasing Manager's Index rose to 51.2 in August from a 101-month low of 47.9 in July. A reading above 50 on the index indicates expansion.
The expansion, albeit modest, came a day after the government said manufacturing growth in the first quarter of the current financial year plummeted to 1.2% from 10.7% a year ago, bogged down by the lingering effects of demonetisation and GST rollout and making India's GDP growth slump unexpectedly to a three-year low of 5.7%.
All three monitored sub-sectors intermediate, consumer and capital posted substantial recoveries, with capital goods outperforming consumer and intermediate goods in terms of production growth rates, the survey said. On exports, the survey showed a rise in new work from abroad which “reflected buoyant global demand for Indian-manufactured products.“ To cope with higher workloads, manufacturers hired extra staff at the quickest pace since March 2013.