The withdrawal of high-value banknotes in India reportedly obstructed manufacturing growth in November, survey figures IHS Markit showed Thursday.
The Nikkei Purchasing Managers' Index, or PMI, fell to 52.3 in November from 54.4 in the previous month. However, any reading above 50 indicates expansion in the sector.
Manufacturing production growth slowed amid reports of cash shortages. New business also increased at a softer pace in November. Moreover, the rate of increase was the slowest since July.
Panelists reported higher demand from domestic as well as external clients, but indicated that growth was hampered by the money crisis.
Employment level in the sector was broadly unchanged in November. At the same time, outstanding business increased for the sixth successive month.
"Of respite to firms, cost inflationary pressures softened, which in turn encouraged the vast majority of businesses to keep their selling prices unchanged," Pollyanna De Lima, an economist at IHS Markit, said.
"If this trend is sustained we will likely see further cuts to the benchmark rate."
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