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Solid Rise In Factory Orders Boosts Production Growth At 2019-End: IHS Markit
Rising from 51.2 in November to 52.7 in December, the headline seasonally adjusted IHS Markit India Manufacturing PMI pointed to the joint-strongest improvement in the health of the sector for ten months.
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Following a subdued start to the third quarter of fiscal year 2019-20, the Indian manufacturing industry took a significant step forward during December, according to IHS Markit India Manufacturing Purchasing Managers' Index (PMI) released on Thursday.
With new orders rising at the fastest pace since July, companies ramped up production and resumed hiring efforts. There was also a renewed upturn in input buying. Elsewhere, rates of input cost and output charge inflation accelerated to 13- and 34-month highs respectively. Rising from 51.2 in November to 52.7 in December, the headline seasonally adjusted IHS Markit India Manufacturing PMI pointed to the joint-strongest improvement in the health of the sector for ten months.
However, owing to a weak performance in October and November, the average quarterly reading for Q3 FY19-20 was the lowest since the three months to September 2017.
Four of the five sub-components of the PMI increased in December while suppliers' delivery times were unchanged from the preceding survey period. At the sub-sector level, growth was led by consumer goods, though intermediate goods also made a stronger contribution
to the headline figure.
Meanwhile, capital goods remained in contraction.
Indian manufacturing output rose at a marked pace in December, the joint-fastest in ten months. Companies that signalled growth commented on the securing of new work, the successful launch of new products and improved technology.
New work increased solidly, with the pace of expansion picking up to the fastest since July. Where growth was noted, firms reported marketing successes, new product drives and better demand conditions.
The uptick in total sales was supported by higher demand from overseas. New export orders expanded for the 26th month in a row, albeit modestly.
"The uptick in Indian manufacturing sector growth signalled by the latest PMI results will be welcomed by policymakers, particularly given the concerning results observed in October," said Principal Economist at IHS Markit Pollyanna de Lima.
"Factories benefited from a rebound in demand and responded by scaling up production to the greatest extent since May. There were also renewed increases in input purchasing and employment during December," she said in a statement.
"However, a note of caution is evident from the survey's measure of business confidence. The degree of optimism signalled at the end of 2019 was the weakest in just under three years, reflecting concerns over market conditions, which could restrict job creation and investment in the early part of 2020," added de Lima.
The IHS Markit India Manufacturing PMI is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.
IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government.