India factory activity unexpectedly expands in August as orders bounce back

India’s factory activity unexpectedly expanded in August, snapping back from a contraction the previous month, as disruptions stemming from confusion over a new national sales tax eased, a business survey showed on Friday.

The rebound suggests that India’s economic growth rate, which unexpectedly slipped to a three-year low of 5.7 percent in the April-June quarter from a year ago, may also improve in the current quarter.

The Nikkei/Markit Manufacturing Purchasing Managers’ Index rose more than three points to 51.2 in August from 47.9 in July, beating the median economist forecast of 49.3 in a Reuters poll. A reading above 50 indicates expansion.

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