India’s manufacturing PMI falls to four-month low in Jan at 54

India’s factory activity hit a four-month low in January at 54.0. The manufacturing PMI in December was 55.5. “The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) was at 54.0 in January, down from 55.5 in December and signalling the weakest improvement in the health of the sector since last September. Still, the headline figure remained above its long-run average (53.6),” stated the index compiled and collected by IHS Markit. 

The report stated that operating conditions across the manufacturing industry improved at the start of the year, although the new COVID-19 wave restricted growth. “January data showed the slowest increases in new orders and output in four months, but rates of expansion remained historically elevated. Similarly, there was a substantial, albeit softer upturn in input buying,” it said.  

Business confidence hit a 19-month low over concerns surrounding the pandemic and the possibility of further restrictions. Input cost inflation eased for the third month running, factory gate charges rose at a quicker pace than in December.

Companies scaled up production in January, but growth was “stymied by raw material scarcity, inflationary pressures and the intensification of the pandemic”.

“Although goods producers forecast output growth in the year ahead, overall sentiment was dampened by pandemic-related uncertainty and inflation expectations. The overall level of business confidence slipped to its lowest mark in over one-and-a-half years,” it added. 

Tamed business optimism led to monthly decline in manufacturing jobs. While the fall was modest, it quickened from December. Input costs substantially increased too for goods producers.

Input inventories continued to increase at the start of the year but “stocks of finished goods decreased further amid the fulfillment of orders from inventories”.

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

Also read: India’s manufacturing PMI falls to 55.5 in Dec