TOKYO -- The Nikkei India Manufacturing Purchasing Managers' Index, or PMI, rose to 50.4 in January from December's 49.6. The index returned to the above-50 growth zone after December's sudden drop stemming from the high-value banknotes demonetization.
A reading above 50 indicates economic expansion, while one below 50 points toward contraction.
The main factors contributing to the recovery were growth of both new orders and output. According to IHS Markit, which compiled the survey, anecdotal evidence highlighted a return to normal market conditions and a subsequent improvement in demand.
In December's survey, panel firms blamed the demonetization for the downturn, as cash shortages in the economy reportedly resulted in fewer levels of new orders received.
Pollyanna De Lima, economist at IHS Markit, commented on January's PMI: "Improving confidence among firms bodes well for the outlook, with the expansion in manufacturing output likely to pick up pace in coming months."
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