India’s Manufacturing PMI Remains Stable In December
A worker labors at the welding line on the Innova Crysta compact multi-purpose vehicle (MPV) production line at the Toyota Kirloskar Motor Ltd. plant in Bidadi, Karnataka, India, on Wednesday, Sept. 9, 2020. Photographer: Dhiraj Singh/Bloomberg

India’s Manufacturing PMI Remains Stable In December

A gauge of activity across India’s manufacturing sector remained steady even as employment fell for nine straight months.

The IHS Markit India Manufacturing Purchasing Managers’ Index stood at 56.4 in December compared with 56.3 in November. A reading above 50 indicates economic expansion.

The latest PMI results for the Indian manufacturing sector continued to point to an economy on the mend as a supportive demand environment and firms’ efforts to rebuild safety stocks underpinned another sharp rise in production.
Pollyanna De Lima, Economics Associate Director, IHS Markit  

Reflecting the loosening of Covid-19 restrictions, strengthening demand and improved market conditions, factory orders increased during December, the release said. In response, firms lifted production again. In both cases, rates of expansion remained sharp despite easing to four-month low, the release said.

Goods producers continued to make additional input purchases in December, extending the current sequence of growth to five months. Also, the rate of expansion accelerated from November, the release said. This helped firms lift their preproduction inventories, with stocks of purchases clocking their quickest pace of growth since March 2011. Stocks of finished goods declined again, with post-production inventories falling due to strong sales growth.

New export orders increased at the slowest pace in four months, hampered by the pandemic.

Input cost inflation accelerated to a 26-month high in December, with those surveyed noting increased prices for chemicals, metals, plastics and textiles. While output charges also rose, the rate of increase remained marginal.

Employment remained a pain point. Companies stated that government guidelines to have employees working only on shifts, and difficulties in finding suitable staff were the key factors causing the latest fall in payroll numbers. But the pace of contraction was moderate and the weakest in the current downturn period, the survey said.

Still, Indian manufacturers remained optimistic over increasing output in the coming year. The degree of optimism, however, weakened to a four-month low as some firms were concerned about the lasting effect of the Covid-19 pandemic on the global economy.

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