According to a monthly survey, India’s manufacturing sector activity reached a 13-month high in December, helped by strong demand conditions and healthy inflows of new business.
The S&P Global India Manufacturing Purchasing Managers’ Index (PMI), which is seasonally adjusted, increased to 57.8 in December from 55.7 in November as business conditions saw their biggest improvement in over two years.
The December PMI data indicated that overall operating conditions had improved for the 18th consecutive month. In terms of the PMI, a print above 50 denotes expansion and a print below 50 denotes contraction.
“Following a promising start to 2022, the Indian manufacturing industry maintained a strong performance as time progressed, wrapping the year with the best expansion in production seen since November 2021,” Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said.
The hiring process continued through December, and more inputs were purchased as businesses sought to boost production and increase inventories.
Sales growth in December was boosted by persistent demand. In addition to receiving steady inflows of new business, panellists increased production to the highest level since November 2021.
According to the survey, advertising, product diversification, and favourable economic conditions all contributed to sales growth.
“Less challenging supply-chain conditions also supported the upturn. Delivery times were reportedly stable, which enabled firms to secure critical materials and boost their input stocks,” Lima said.
As several companies reportedly struggled to secure new business from important export markets, new orders for exports increased at the slowest rate in five months, according to the report.
Companies were upbeat about the production outlook for the upcoming year. The main chances for growth prospects were identified as being advertising and a rising demand.
“While some may question the resilience of the Indian manufacturing industry in 2023 amid a deteriorating outlook for the global economy, manufacturers were strongly confident in their ability to lift production from present levels,” Lima said.
Cost pressures on the inflation front remained comparatively mild in December, with the overall inflation rate remaining largely unchanged from November and being the second-slowest since September 2020.
S&P Global compiles the S&P Global India Manufacturing PMI using responses to questionnaires that were sent to purchasing managers in a panel of about 400 manufacturers. Based on contributions to GDP, the panel is segmented by detailed sector and company workforce size.
