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India's manufacturing PMI sees solid rise in December at 52.7

02 Jan 2020 Evaluate

Indian manufacturing industry saw a solid rise in their activities in the month of December 2019, on account of rising new orders and output. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance -surged to 52.7 in December from 51.2 in November. 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.

As per the survey report, output rose at a marked pace in December, the joint-fastest in ten months. New work also increased solidly, with the pace of expansion picking up to the fastest since July, on the back of marketing successes, new product drives and better demand conditions. Further, 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. Buoyed by strengthening underlying demand, goods producers also resumed their hiring efforts in December.

On the price front, average cost burdens increased further, due to higher prices paid for chemicals, food, metals, paper, plastics and textiles. Moreover, the overall rate of inflation reached a 13-month high. In order to protect margins, goods producers lifted their fees again in December. The rate of charge inflation was solid and the quickest in close to three years. Besides, companies were cautious regarding the year-ahead outlook. On average, production is expected to expand in the coming 12 months, but the degree of optimism weakened to a 34-month low.

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