Country's manufacturing activity jumped at its swiftest rate in almost eight years in the month of January amid a steep increase in new business and production supporting the job creation at the quickest pace in nearly seven-and-a-half years.

As per a private company, IHS Markit India, the Manufacturing Purchasing Managers' Index jumped to 55.3 in January in comparison to 52.7 in December. Notably, this is the highest jump since February 2012 and above the 50-mark that separates growth from contraction for the 30th straight month.

Pollyanna De Lima, principal economist at IHS Markit said, "The PMI results show that a notable rebound in demand boosted the growth of sales, input buying, production and employment as firms focused on rebuilding their inventories and expanding their capacities in anticipation of further increases in new business." The brightest spot in the whole spectrum was the consumer goods sub-sector; further, the growth was continued in intermediate goods and capital goods moved back into expansion.

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Employees work inside a sari, a traditional clothing worn by women, manufacturing factory in Surat, India, March 8, 2019.Reuters

What is the Purchasing Managers' Index?

The Purchasing Managers' Index (PMI) is an index of the fundamental direction of economic trends in the manufacturing and service sectors. It includes a diffusion index that calculates whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting. The PMI index generally shows the current and future business conditions to company decision-makers, analysts, and investors.

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Endurance Technologies is an Aurangabad-based company that makes die-casting, suspension, transmission and brakes. A man works inside a car parts manufacturing workshop in Kolkata  (representational image).Reuters file

It is to be noted that an increase in the total sales was augmented by revived demand from external markets which were highlighted in the fastest increase in new export orders since November 2018.

The employment growth in the country also witnessed a sharp increase in the month of January with the corporates increasing employment at the fastest rate in around seven-and-a-half years.

The main reason attributed to the jump in employment generation was attributed to new business growth and projects in the pipeline. "To complete the good news, there was also an uptick in business confidence as survey participants expect buoyant demand, new client wins, advertising and product diversification to boost output in the year ahead," Lima further said.