India’s manufacturing sector slowed down its momentum in December, with IHS Markit’s Purchasing Managers Index (PMI) decelerating to 55.5 from a 10-month high of 57.6 in the preceding month. A reading of more than 50 suggests whereas a reading of less than 50 indicates contraction inactivity.
Meanwhile in #Italy, production growth remained at a near-record pace in December as new work continued to rise rapidly. Supply bottlenecks also drove an unprecedented increase in backlogs and still-high input cost inflation. Read more: https://t.co/GPtdwhimYI pic.twitter.com/niIi3GpMcD
— IHS Markit PMI™ (@IHSMarkitPMI) January 3, 2022
According to the findings of the IHS Markit survey, which was issued on January 3, new work and output in India continued to climb sharply.
“The last PMI results of 2021 for the Indian manufacturing sector were encouraging, with the economic recovery continuing as firms were successful in securing new work from domestic and international sources. Higher sales underpinned a further upturn in production and companies carried on with their restocking efforts,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
While in December the manufacturing sector had orders increasing at decelerating momentum since September, international orders were rising at the sixth straight month.
Although the manufacturing PMI fell in December, it averaged 56.3 in the fourth quarter of 2021, the highest since the January-March quarter of that year.
However, supply chain disruptions and inflationary headwinds continue to influence sentiments.
According to IHS Markit, Indian manufacturers’ input costs increased sharply in December, although the rate of inflation plunged to a three-month low, but remained above the long-term average.
Manufacturers had to face an increase in overall cost burdens. Companies reported spiking rates in an array of items including chemicals, electronic components, and textiles. Output charges increased as companies passed the high-cost burden to clients.
“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,” it said.
Spending trends varied, and input inventories expanded, the report stated. “Finally, international demand for Indian goods continued to improve in December. New export orders rose for the sixth month in succession, albeit only slightly,” it added.