India’s manufacturing sector recorded its sharpest uptick in output in 13 months in December 2022, with new orders rising at the fastest pace since February 2021 even though selling prices surged more than input costs for the first time in two and a half years, as per the S&P Global India Manufacturing Purchasing Managers’ Index (PMI).
The seasonally-adjusted PMI reading for December 2022 rose to 57.8 from 55.7 in November, reflecting what the firm called ‘a robust improvement in the health of the sector that was the best seen since October 2020’. For the October to December quarter, the PMI averaged 56.3, the highest in a year. A reading of 50 on the PMI indicates no change in business activity levels.
Scaling up production levels in December, firms continued to hire more staff for the tenth month in a row but the growth in jobs was the slowest since September. With overall demand strong and resilient, producers also enhanced input purchases at a ‘near-record’ pace that ‘was historically sharp and the strongest since May 2022’, S&P Global reckoned from industry responses for the survey-based index.
Slow growth for new orders from abroad
However, the deepening slowdown in major global destinations for Indian products began to dent new orders from abroad, which grew at the slowest pace in five months as several companies reportedly struggled to secure new work from key export markets.
“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,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
“Demand strength took centre stage among the reasons provided by firms for improvements in many measures, while less challenging supply-chain conditions also supported the upturn,” Ms. De Lima noted.