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Indian manufacturing sector strengthens in December

04 Jan 2021 Evaluate

Indian manufacturing sector strengthened in the month of December, with manufacturers stepping up production and input buying amid efforts to rebuild their inventories following business closures earlier in the year. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 56.4 in December as against 56.3 in November.

The report further noted that factory orders increased during December, on the back of the loosening of COVID-19 restrictions, strengthening demand and improved market conditions. In response, firms lifted production again. In both cases, rates of expansion remained sharp despite easing to four-month lows. Goods producers continued to make additional input purchases in December, extending the current sequence of growth to five months.

On the price front, input cost inflation accelerated to a 26-month high in December, while output charges were lifted in response to rising cost burdens, but the rate of inflation was only marginal. Meanwhile, Indian manufacturers maintained an upbeat view that output will increase in the coming year. However, the degree of optimism weakened to a four-month low as some firms were concerned about the lasting effect of the COVID-19 pandemic on the global economy.

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