Factory output grows at five-month high on upsurge in orders
The survey also showed that the inflationary pressure eased in the sector as input prices rose at a slower pace and the corresponding easing of output prices helped boost demand.
Manufacturing sector grew at its fastest pace in five months in March, marking the third straight month of expansion, on strong surge in domestic and export orders, a monthly survey showed on Tuesday.
The survey also showed that the inflationary pressure eased in the sector as input prices rose at a slower pace and the corresponding easing of output prices helped boost demand. The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -- an indicator of manufacturing activity -- increased to a five-month high of 52.5 in March, from 50.7 in February.
A reading above 50 indicates expansion, while any score below the mark means contraction.
The factory output grew fast as order books expanded at the quickest pace since the demonetisation move, which had hit the manufacturing as well as services sector hard in a largely cash-dependent economy.
This is the third consecutive month of expansion in the manufacturing sector after the demonetisation-induced contraction during November-December period.
"PMI data for March reveal positive developments in the Indian manufacturing sector. Rates of expansion in factory orders and production accelerated again, encouraging some companies to scale up their input buying and take on additional workers," said Pollyanna De Lima, Economist at IHS Markit and author of the report.
On the prices front, the report said although both input costs and output charges rose further, inflation rates softened from February.