A worker cuts metal inside a workshop making metal pipes in Mumbai, India, on August 11, 2017. Photo credit: Reuters
India’s manufacturing sector in November posted the best growth in output and new orders since August, and a decline in input costs lifted sentiment to an eight-year high, according to the S&P Global India Manufacturing Purchasing Managers’ Index (PMI). Which went above 55.3. 55.7 from last month October.
A PMI reading of 50 indicates no change in economic activity from the previous month, while a reading above 50 indicates expansion.
While companies reported a significant recovery in international demand for goods, with new export orders rising at the second-fastest pace since May, input cost inflation sharply eased to a 28-month low.
While the cost of metals, paper and transportation continued to rise, the pace at which producers passed on costs to consumers fell at their slowest pace since February 2022. In fact, 92% of 400 firms surveyed by S&P Global did not change their charges. from October levels.
New orders and output picked up in the consumer and intermediate goods categories, but capital goods producers reported a slowdown. Employment increased solidly, and for the ninth month in a row, as firms readjusted operating efficiencies in line with sales growth.
“Finally, firms were confident that demand would remain strong over the coming 12 months. As a result, they expect an increase in production volumes. The PMI report said sentiment has reached its highest level in nearly eight years.
“India’s manufacturing sector continued to perform well in November, despite fears of a recession elsewhere and a worsening outlook for the global economy,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
“Survey participants were very confident in both the jump in demand for their goods and their ability to further ramp up production in 2023,” Ms de Lima said.
Strong demand prompted businesses to rebuild inventory and increase production to accommodate higher sales, and this was reflected in a continued increase in input purchases in November. S&P Global said the pace of accumulation was substantial and was the second fastest since July.