A worker cuts metal at a metal pipe manufacturing workshop in Mumbai, India, August 11, 2017. | photo credit: Reuters
In November, India’s manufacturing sector saw the best rise in production and new orders since August and falling input costs lifted sentiment to an eight-year high, according to the S&P Global India Manufacturing Purchasing Managers’ Index. Index (PMI) which fell from 55.3 in October to 55.7 last month.
A PMI reading of 50 indicates no change in economic activity from the previous month, while a reading above 50 reflects expansion.
As businesses reported a notable improvement in international demand for goods, with new export orders growing at the second fastest pace since May, input cost inflation fell sharply to its lowest level in 28 months.
As metals, paper and transportation costs continued to rise, the rate at which producers passed costs on to consumers fell at the slowest rate since February 2022. In fact, 92% of the 400 companies surveyed by S&P Global have not changed their charges. from October levels.
New orders and production accelerated in the consumer and intermediate goods categories, but producers of capital goods reported a slowdown. Employment rose solidly and for the ninth consecutive month, as companies readjusted their operational capacities in line with the recovery in sales.
“Finally, companies were confident that demand would remain strong over the next 12 months. As a result, they expect production volumes to grow. Sentiment improved to its highest level in nearly eight years,” the PMI report said.
“India’s manufacturing sector continued to perform well in November, on top of heightened recession fears elsewhere and a deteriorating outlook for the global economy,” said Pollyanna De Lima, associate director of economics at S&P Global. Market Intelligence, adding that there was impressive evidence of demand resilience.
“Survey participants were also very confident both in the strength of demand for their products and in their ability to further increase production in 2023,” Ms. De Lima noted.
Strong demand also prompted companies to replenish inventories and increase production to meet higher sales, which was reflected in a continued increase in input purchases in November. The pace of accumulation was substantial and the second fastest since July, S&P Global said.