India’s manufacturing activity improved to the greatest extent in over 2 years, according to the S&P Global PMI data. Manufacturing PMI rose to 57.8 in December, as against 55.7 in November.
“At 57.8 in December, up from 55.7 in November, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) pointed to a robust improvement in the health of the sector that was the best seen since October 2020. The PMI average for the third fiscal quarter (56.3) was the highest recorded since one year ago,” said S&P.
Business conditions improved to the greatest extent in over two years, while panellists continued to obtain healthy inflows of new business, and stepped up production to the greatest extent since November 2021. Hiring activity was stretched too, it said, adding that input cost inflation was sustained. There was a quicker increase in selling prices.
Economics Associate Director at S&P Global Market Intelligence Pollyanna De Lima said, "Following a promising start to 2022, the Indian manufacturing industry maintained a strong performance as time progressed, wrapping the year with the best expansion in production seen since November 2021. Demand strength took centre stage among the reasons provided by firms for improvements in many measures. Additional materials were purchased and extra workers hired as companies sought to supplement production and maintain healthy levels of inventories. Input stocks rose at a near-record pace.”
De Lima added that less challenging supply-chain conditions also supported the upturn. Some might question the resilience of the manufacturing industry in the new year but manufacturers are strongly confident in their ability to lift production.
Demand resilience boosted sales growth in December, the report said. In some cases, product diversification and favourable economic conditions supported sales. International demand for Indian goods improved but to a lesser extent than in November. Orders from abroad rose at the slowest pace in five months.
Demand remained conducive of growth and manufacturers scaled up production at the end of 2022. Buying levels increased too among goods producers.
Suppliers were also quick to match the pace of input demand. Indian goods producers hired additional staff at the end of the year. The latest increase in employment was the slowest since September.
“Cost pressures remained relatively muted in December, with the overall rate of inflation little-changed from November and the second-slowest since September 2020. Underlying data indicated that price reductions for some raw materials partly offset increases elsewhere,” the report said.
The rate of inflation for selling prices outpaced that seen for input costs for the first time in close to two-and-a-half years, the report added.
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