India manufacturing PMI slips in December but still shows strong reading – Mint

Data released by the IHS Markit showed Manufacturing Purchasing Managers’ Index at 55.5 in December, though, pointed to a robust improvement in overall operating conditions that was elevated by historical standards. This was despite the headline figure slipping from November’s ten-month high of 57.6. It stayed above the 50 mark that separates growth from contraction for a sixth month.

Companies continued with their stock-building initiatives, as evidenced by another robust upturn in buying levels. Business confidence strengthened, but sentiment was again dampened by concerns surrounding supply-chain disruptions, Covid-19 and inflationary pressures, as per the report.

Amid reports of strong demand conditions, fruitful marketing and new client wins, manufacturers observed a further increase in new orders during December. The upturn was sharp, despite being the slowest since September. Similarly, production rose at a sharp pace that was nevertheless the weakest in three months.

“The details show that the headline PMI was supported by strong momentum in production and new orders, although both fell on a sequential basis. The stock of finished goods rose modestly amid a slight deterioration in supply delivery timelines, which fell to a 16-month low. Cost pressures remain elevated, but there was a mild retracement in both input and output prices, which fell at the margin,” said Rahul Bajoria, Chief India Economist at Barclays.

Employment slipped back into contractionary territory last month after growing in November for the first time since July, however, the pace of job shedding was marginal.

“Concerns over elevated price pressures hampered business confidence in December, with firms also worried that the pandemic and supply-chain issues could dampen the recovery next year. The overall degree of optimism remained below its long-run average, despite improving from November’s 17-month low,” the report by IHS Markit further highlighted.

Optimism about future output strengthened last month, but concerns about supply-chain disruptions, the rapid spread of the new Omicron variant of coronavirus and inflationary pressures dampened sentiment.