In November, India’s manufacturing sector recorded the best uptick in output and new orders since August and falling input costs lifted sentiment to an eight-year high, as per the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) which moved up from 55.3 in October to 55.7 last month.
A PMI reading of 50 indicates no change in economic activity from the previous month, while a reading above 50 reflects an expansion.
While companies reported a notable improvement in international demand for goods, with new export orders expanding at the second-fastest pace since May, inflation in input costs dropped sharply to the lowest level in 28 months.
While costs of metals, paper, and transportation continued to rise, the pace at which producers passed on costs to consumers fell to the slowest pace since February 2022. In fact, 92% of the 400 firms surveyed by S&P Global did not tweak their charges from October levels.
New orders and production accelerated in the consumer and intermediate goods categories, but capital goods producers reported a slowdown. Employment rose solidly, and for the ninth month in a row, as firms readjusted operating capacities in line with the pick-up in sales.
“Finally, firms were confident that demand would remain strong in the coming 12 months. As a result, they foresee growth of production volumes. Sentiment improved to its highest level in close to eight years,” the PMI report said.
“India’s manufacturing sector continued to perform well in November, besides heightened recession fears elsewhere and a deteriorating outlook for the global economy,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, adding there was impressive evidence of demand resilience.
“Survey participants were also strongly confident in both the buoyancy of demand for their goods and their ability to further lift production in 2023,” Ms. De Lima noted.
Robust demand also made businesses rebuild inventories and lift output to accommodate higher sales, and this was reflected in a continued increase in input purchases in November. The pace of accumulation was substantial and the second-fastest since July, S&P Global said.