Why it is in news?

• Activity in manufacturing quickened to the fastest pace in five years in December, bolstered by a sharp rise in output and new orders, according to a private sector survey 
• “The Indian manufacturing sector ended the year on a strong note, with operating conditions improving at the strongest rate in five years,” IHS Markit said in the report.
• The Nikkei India Puchasing Managers’ Index registered a value of 54.7 in December, compared with 52.6 in November. A value over 50 indicates an expansion while one below 50 denotes a contraction

PMI index :

• PMI or a Purchasing Managers' Index (PMI) is an indicator of business activity -- both in the manufacturing and services sectors.
• Investors use PMI surveys as leading indicators of economic health, given their insight into sales, employment, inventory and pricing.
• A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction. Higher the difference from this mid-point greater the expansion or contraction.

Inflation factor :

• Despite the growth, the sector continues to face some turbulence as delayed customer payments contributed to greater volumes of outstanding work.
• On the price front, July’s Goods and Services Tax (GST) continued to lead to greater raw material costs, with input cost inflation accelerating to the sharpest since April.
• Aashna Dodhia, Economist at IHS Markit and author of the report said firms were restricted in their ability to pass on higher costs to clients, which added upward pressure on margins.
• “Challenges remain as the economy adjusts to recent shocks, but the overall upturn was robust compared to the trend observed for the survey history,” Ms. Dodhia said.

THE HINDU