The conditions for manufacturing turned out to be the most favourable in the country in 5 years with Nikkei manufacturing PMI or Purchasing Managers' Index jumping to 54.7 in the last month as compared to 52.6 in November. The number over 50 on the index is representative of expansion.

Read here to know more about PMI.

This has come on the back of increased orders as well as rise in output. As per the report the payroll figure in the manufacturing sector as well as jobs created increased to its highest since August 2013.

Economist at IHS Markit says, "The sector continues to face some turbulence as delayed customer payments contributed to greater volumes of outstanding work. On the price front, Goods and Services Tax (GST) continued to lead to greater raw material costs, with input cost inflation accelerating to the sharpest since April. As consumer spending recuperates, firms were restricted in their ability to pass on higher cost burdens to clients which further placed upward pressure on firms' margins".

The economist further added, "Challenges remain as the economy adjusts to recent shocks, but the overall upturn was robust compared to the trend observed for the survey history. This outlook was shared by the manufacturing community as sentiment picked up to the strongest in three months amid expected improvement in market conditions over the next 12 months".

Meanwhile demand from the foreign markets also upped at the fasted rate since June.

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