India’s manufacturing Purchasing Managers’ Index (PMI) shot up in December to a joint fastest rate in ten months at 52.7, providing further evidence that the Indian economy may have bottomed out. The reading was at 51.2 in November.
With an improvement in the performance of a number of leading indicators, including Goods and Services Tax (GST) collections, core sector industries, auto sales and non-oil merchandise exports, experts expect factory output to report modest growth in November after having contracted since September.
India’s GDP growth decelerated to a six-and-a-half-year low of 4.5% in the September quarter amid slowing domestic and external demand.
“Following a subdued start to the third quarter of fiscal year 2019/20, the Indian manufacturing industry took a significant step forward during December. 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,” analytics firm HIS Markit said in a statement
Four of the five sub-components of the PMI increased in December, while suppliers’ delivery times was 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.
The uptick in total sales was supported by higher demand from overseas. New export orders expanded for the twenty-sixth month in a row, albeit modestly.
Pollyanna de Lima, principal economist at IHS Markit, however, cautioned regarding evidence 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,” he added.
“At the same time, price indicators showed accelerated rates of inflation for both input costs and output charges. The latter reflected a combination of improved pricing power, given the favourable demand environment, and efforts to protect margins from cost rises,” Lima said.
News Source:- livemint