India’s Manufacturing PMI Falls To Lowest In Three Months In November
Auto parts used in the assembly of motorcycles sit in containers on the production line at a manufacturing facility in Chennai, India. (Photographer: Dhiraj Singh/Bloomberg)  

India’s Manufacturing PMI Falls To Lowest In Three Months In November

A gauge of activity across India’s manufacturing sector fell to its lowest in three months, reflecting the slower increase in sales and production. But it remained well in the expansion zone.

The IHS Markit India Manufacturing Purchasing Managers’ Index eased to 56.3 in November from 58.9 in October—a decadal high. A reading over 50 indicates economic expansion.

Although softening of rates of expansion seen in the latest month does not represent a major setback, since these are down from over decade highs in October, a spike in Covid-19 cases and the possibility of associated restrictions could undermine the recovery.
Pollyanna De Lima, Economics Associate Director, IHS Markit

Aggregate new orders rose at the slowest pace in three months, according to a media statement by IHS Markit. The upturn, however, was sharp and stronger than that seen for eight years prior to September.

The easing of Covid-19 restrictions, combined with an improvement in market conditions and a pick-up in demand, supported an increase in production. Although the slowest for three months, the rate of expansion in output was sharp and outpaced its long-run average, the release said. Amid reports of strong demand and greater output requirements, Indian manufacturers bought additional inputs even as the quantity of purchases rose at the slowest pace in three months.

November data highlighted a quicker increase in input costs facing Indian manufacturers, with the overall rate of inflation the strongest in two years. As a result, companies adjusted their fees upwards, with the rate of charge inflation picking up to a nine-month high.

Though lower than in October, new export orders continued to show a marked increase in November, with survey participants reporting strong demand for their goods from key export markets.

Employment, on the other hand, continued to fall as companies observed social distancing guidelines. “The rate of job shedding was solid and little-changed from October,” the release said. Subsequently, firms noted another increase in outstanding business during November, it said.

Business optimism faded slightly in November. But output growth is still predicted for the year ahead, even amid concerns about public policies, rupee depreciation and the Covid-19 pandemic.

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