Indian factory activity expanded at its fastest pace in nearly two years in November as burgeoning order books led manufacturers to accelerate output, a business survey showed on Monday.
New orders were supported by strong domestic demand for consumer goods while foreign orders remained robust. The sub-index soared to a 21-month high of 56.2 from October’s 53.
The expansion in output encouraged manufacturers to add more jobs.
The survey also showed companies passed on additional input costs to consumers at a faster pace, which could revive inflationary pressures after several months of slowing.
“The pick-up in output prices could partly be signaling some revival in pricing power among businesses,” said Pranjul Bhandari, chief India economist at HSBC.
Economic growth slowed to 5.3% in the three months to September, from 5.7% in the previous quarter, but the Reserve Bank of India is expected to stand pat on interest rates when it meets on Tuesday despite pressure from the government to lower borrowing costs.
The RBI’s key lending rate is expected to remain unchanged at 8% until at least April.