India’s Manufacturing Sector Growth Marks 18-Month Low At 54.9 In Dec

S&P Global's Manufacturing PMI survey found that factory orders and output increased, however, the expansion was muted, while the business confidence about the outlook for the year ahead strengthened

India’s manufacturing sector logged a decline as the sector’s growth declined to an 18-month low of 54.9 in December owing to a muted increase in factory orders and output, despite minimal inflation, the monthly survey conducted by S&P Global revealed on Wednesday. 

The HSBC India Manufacturing PMI survey, conducted by the rating agency S&P Global, found that factory orders and output increased, however, the expansion was muted, while the business confidence regarding the outlook for the year ahead strengthened, reported PTI. 

The Manufacturing PMI for December dipped to 54.9 against 56 logged a month earlier in November. In the Purchasing Managers’ Index (PMI) parlance, a reading above 50 indicates expansion, while a figure below 50 means contraction. S&P Global makes the HSBC India Manufacturing PMI after putting together responses from questionnaires sent to purchasing managers in a panel of nearly 400 manufacturers. 

The reading showcased that the manufacturing sector in the country kept expanding in December, however, at a softer pace, following an uptick in the earlier month. Pranjul Bhandari, chief India economist, HSBC, stated, “Growth of both output and new orders softened, but on the other hand, the future output index rose since November.”

The survey further found that despite a loss of growth momentum, the manufacturing sector continued to expand strongly in December. The increase in production in the sector remained strong due to new business gains, favourable market conditions, fairs, and expositions. 

The December figure displayed a 21st consecutive rise in international order receipts at goods producers in the country. Companies logged gains from clients in Asia, Europe, the Middle East, and North America, while new export sales grew at a moderate pace, which was the joint-slowest in eight months. 

On the prices end, input costs gained at the second-slowest rate in around three and a half years, while charge inflation dampened to a nine-month low. The items reported to have increased in price included chemicals, paper, and textiles. 

The inflation rate changed barely from November, however, remained negligible against historical standards and was the second-weakest in a little under three and a half years, the survey found. 

Bhandari added that the rates of increase in input and output prices stood broadly unchanged. The PMI data overall displayed a general lack of pressure on the capacity of the manufacturers at the end of the third fiscal quarter. 

Regarding the year-ahead outlook for production, the Indian manufacturers expressed optimism for three months. The survey stated that anecdotal evidence highlighted advertising, better customer relations, and new enquiries as the main factors responsible for boosting business confidence in December.