Mumbai, Jan 2 (IANS): India's manufacturing sector's activity expanded exponentially in December 2017 due to accelerated increase in output and new orders, key macro-economic data showed on Tuesday.

Consequently, the Nikkei India Manufacturing Purchasing Managers' Index (PMI), a composite indicator of manufacturing performance, increased to 54.7 in December 2017 from 52.6 reported for November.

An index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease.

According to the PMI, the manufacturing sector ended 2017 on a positive note, with "operating conditions improving at the strongest rate in five years".

As per the PMI data, the overall upturn was supported by the sharpest increase in output and new orders since December 2012 and October 2016, respectively.

Commenting on the PMI data, Aashna Dodhia, Economist at IHS Markit and the author of the report, said: "Strong business performance was underpinned by the fastest expansions in output and new orders since December 2012 and October 2016, respectively.

"Anecdotal evidence pointed to stronger market demand from home and international markets.

"However, the sector continues to face some turbulence as delayed customer payments contributed to greater volumes of outstanding work. On the price front."

"July's Goods and Services Tax (GST) continued to lead to greater raw material costs, with input cost inflation accelerating to the sharpest since April," Dodhia said.