India's manufacturing sector activity fell to a four-month low in February as factory output and new business orders rose at a slower pace, says a monthly survey.
The Nikkei India Manufacturing Purchasing Managers Index (PMI) fell to 52.1 in February from 52.4 in January, indicating a modest improvement in operating conditions.
This is for the seventh consecutive month that the index remained above the 50-point-mark, that separates expansion from contraction.
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According to Japanese financial services major Nomura, Indias manufacturing PMI remained in the expansion zone but suggested some consolidation after the rapid ramp up of activity in December.
In December 2017, the index had touched a 60-month high of 54.7.
"It was promising to see that Indias manufacturing sector remained in growth territory, as the impact of Julys Goods and Services Tax continues to dissipate," said Aashna Dodhia, Economist at IHS Markit and author of the report.
In response to greater production requirements, firms raised their staffing levels during February. Although modest, the pace of job-creation was slightly faster than January.
On the prices front, the survey said that cost inflation accelerated to the sharpest since February 2017, adding to expectations that inflationary risks will continue over the coming months.
IHS Markit upgraded its CPI forecast to 5.2 per cent for financial year 2017-2018 amid a stronger oil price forecast and growing fiscal risks.
The survey further noted that Indian manufacturers remained optimistic towards the 12-month outlook for output during February.
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