India’s manufacturing PMI falls to 55.5 in Dec

India’s manufacturing Purchasing Managers' Index (PMI) fell from November’s high to 55.5 in December. PMI in November had hit a 10-month high at 57.6. “At 55.5 in December, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) pointed to a robust improvement in overall operating conditions that was elevated by historical standards. This was despite the headline figure slipping from November's ten-month high of 57.6. Moreover, the latest quarterly reading was at 56.3, its highest since the final quarter of fiscal year 2020/21,” stated IHS Markit in a report.

The report stated that the health of the manufacturing industry improved in December, with new work growth and production remaining sharp in spite of losing momentum. “Business confidence strengthened, but sentiment was again dampened by concerns surrounding supply-chain disruptions, COVID-19 and inflationary pressures,” it added.

The report stated that even as the rate of inflation eased to a three-month low, input costs rose sharply and at an above-trend pace. New orders in December were driven by strong demand conditions, fruitful marketing and new client wins. “The upturn was sharp, despite being the slowest since September. Similarly, production rose at a sharp pace that was nevertheless the weakest in three months,” it said.

Manufacturers reported a monthly increase in overall cost burdens. Companies reported higher prices for a wide range of items including chemicals, electronic components, and textiles. Output charges rose as some companies transferred higher cost burdens through to clients.

“Concerns over elevated price pressures hampered business confidence in December, with firms also worried that the pandemic and supply-chain issues could dampen the recovery next year. The overall degree of optimism remained below its long-run average, despite improving from November's 17-month low,” it said.

Spending trends were mixed, and input inventories expanded, the report stated. “Finally, international demand for Indian goods continued to improve in December. New export orders rose for the sixth month in succession, albeit only slightly,” it added.

Also read: India’s manufacturing PMI hits 10-month high in Nov at 57.6