Amid reports of orders being fulfilled directly from stocks, holdings of finished goods decreased again. That said, the rate of inventory depletion was modest and little-changed since September. The average price of inputs rose markedly during October, with the rate of inflation quickening to the fastest since August 2014. Survey participants reported higher prices across a wide range of goods, but particularly highlighted steel, plastic and petrol. Firms passed on to clients' part of these higher cost burdens by raising their prices charged. The rate of output price inflation was the fastest in six months, but modest in the context of historical data. Companies also attempted to offset the effects of marked input cost inflation by
purchasing and storing a greater level of pre-production items. Buying levels grew at the strongest rate in 14 months, while stock levels increased at the fastest pace since July 2015. Finally, the time taken for suppliers to deliver inputs was broadly
unchanged (on average) in October.

Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at IHS Markit and author of the report said, "October data provide positive news for India's economy, as manufacturing output and new orders expanded at the fastest rates in 46 and 22 months respectively. The sector looks to be building on the foundation of the implied pick-up in growth in the previous quarter. Supporting this was the RBI's MPC announcement of a further 25 basispoint reduction in its policy rate to 6.25 percent.

"The extended easing cycle, however, brought upside risks to inflation, with manufacturers seeing purchase costs rising at the quickest pace in over two years. Part of the increase in cost burdens was passed on to consumers by way of higher
selling prices, which is likely to continue on an upward trend as we head towards the year end. Nevertheless, the breadth of the upturn in manufacturing should assist in its sustainability. Although the consumer goods sector again outperformed
its intermediate and investment goods peers, all three sectors reported strong and accelerated growth in October. The domestic market was the prime source of new business gains, but let's not forget that there is also a robust export component in
these positive numbers."

Source: Nikkei inc.

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