India’s manufacturing sector recorded its biggest increase in output in 13 months. File (Image for representation purposes only) | photo credit: Reuters

India’s manufacturing sector recorded its largest output increase in 13 months in December 2022, with new orders rising at the fastest rate since February 2021, even as selling prices rose more than input costs for the first time. in two and a half years, according to the S&P Global India Manufacturing Purchasing Managers’ Index (PMI).

The seasonally adjusted PMI for December 2022 rose to 57.8 from 55.7 in November, reflecting what the company called “a robust improvement in the health of the sector that was the best since October 2020.” For the October-December quarter, the PMI averaged 56.3, the highest in a year. A reading of 50 on the PMI indicates no change in business activity levels.

By boosting production levels in December, businesses continued to hire more staff for the tenth straight month, but job growth was the slowest since September. With strong and resilient aggregate demand, growers also increased input purchases at a “near-record” pace that “was historically high and the strongest since May 2022,” S&P Global estimated based on responses from the industry for the survey-based index.

Slow growth in new orders from abroad

However, the growing slowdown in major global destinations for Indian goods has started to weigh on new orders from overseas, which grew at the slowest pace in five months as several companies reportedly struggled to secure new jobs on major export markets.

“While some may question the resilience of Indian manufacturing in 2023 amid a deteriorating outlook for the global economy, manufacturers were strongly confident in their ability to increase production from current levels,” said Pollyanna De Lima, associate director of economics at S&P Global Market. Intelligence.

“Strength of demand took center stage among the reasons companies provided for improving many metrics, while less challenging supply chain conditions also supported the recovery,” De Lima noted. .