(RTTNews) - India’s Manufacturing Purchasing Managers’ index increased in August, reflecting a rise in production and new orders, results of a study by Markit Economics and ABN AMRO showed Monday.

The ABN AMRO Purchasing Managers’ index, or PMI improved slightly to 57.9 in August from 57.8 in July. Production rose rapidly in the month, on account of favorable demand conditions.

A reading above 50 indicates an expansion, while a figure below 50 suggests contraction.

New orders from both the domestic and foreign markets, increased sharply. The report said this was due to a strong market demand along with high quality of service provided by firms.

The stock of finished goods remained unchanged in the month, after declining consecutively for the past four months. Some firms reported an accumulation of stocks in order to meet future requirements, but for others, stocks declined, as there was an efficient dispatch of finished goods.

Input and output price inflation moderated, but manufacturers continued to pay higher prices for inputs such as raw materials and fuel. In turn, manufacturers increased output prices in order to keep up profit margins and also to take advantage of the strong demand conditions.

Purchasing activity increased sharply as firms responded to higher new order requirements.

But, employment growth slowed, as companies hired staff at a more modest pace. Higher output levels combined with lower employment growth reflected the higher productivity in the manufacturing sector.

Supplier delivery performance remained almost unchanged for some firms, while some others reported delays. Volume of unfinished business was unchanged for most companies, but some firms reported higher backlog of work on account of increased new orders.

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