Indian factories started 2019 on solid footing, boosting production in line with the quickest increase in order books for 13 months. At the same time, additional inputs were purchased in January as companies sought to rebuild their inventories. Meanwhile, further jobs were created, while inflationary pressures were negligible in the context of historical data.

Rising from 53.2 in December to 53.9 in January, the Nikkei India Manufacturing Purchasing Managers' Index® (PMI®) indicated a stronger improvement in the health of the goods producing sector. Moreover, the latest reading matched its long-run average. Faster increases in new orders, output and stocks of purchases contributed to the upward movement in the PMI.

Amid reports of successful advertising campaigns, favourable economic conditions and strengthening demand, sales growth picked up in January. The increase in factory orders was the strongest seen in 13 months.

Subsequently, production volumes were boosted at the start of 2019. The rate of expansion was the sharpest since December 2017 and surpassed its long-run average. Intermediate goods makers noted the strongest increases in both new work and production compared to their consumer and investment goods counterparts. Competitive conditions globally curbed growth of external sales, according to panellists. However, a solid increase in new orders from abroad was still recorded, and the current stretch of expansion extended to 15 months.

Robust demand for their goods led Indian manufacturers to utilise their stocks during January. The fall in holdings of finished products was solid, but eased from December. Conversely, pre-production inventories increased in January on the back of strong input buying growth. The rise in quantities of purchases was the most pronounced since December 2017, while the accumulation in stocks was the joint-quickest in 20 months.

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Source: Nikkei inc. & IHS Markit