Manufacturing PMI Eases But Stays In Expansion Zone In December

A gauge of activity across India's manufacturing sector expanded but at a slower pace than the previous month.

The IHS Markit India Manufacturing Purchasing Managers' Index stood at 55.5 in December against 57.6 in November, according to the monthly release. A reading above 50 indicates economic expansion.

The reading for the October-December period stood at 56.3, the highest since the final quarter of FY21, the release said.

Manufacturers observed a further increase in new orders in December. The upturn, however, was the slowest since September. Input inventories expanded, while holdings of finished goods continued to decline as companies fulfilled rising sales from existing stocks.

The rate of inflation eased to a three-month low, but remained above its long-run average. Companies reported higher prices paid for a wide range of items, including chemicals, foodstuff, electronic components, metals and textiles.

Some companies transferred higher costs to clients, but the overall rate of inflation was the weakest since October 2020. "Despite easing in December, input cost inflation was still running at one of its highest rates in around seven-and-a-half years," De Lima said.

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.

Vendor performance worsened to the greatest extent since August 2020. Delays were commonly associated with raw material scarcity among distributors.

New export orders rose for the sixth straight month.

The overall degree of optimism remained below its long-run average despite improving from November's 17-month low.