Signaling further improvement in the health of the Indian manufacturing sector, the seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy posted a good advancement in December, by surging to its six-month high to 54.7 from 53.7 in November, its biggest monthly rise since January 2012.
Boosted by strong factory output and a spike in new orders, both of which hit their highest levels since June, Indian goods-producing sector has shown output growth advancement for the forty-fifth consecutive month. The PMI index has now stayed above the 50 mark that separates growth from contraction for almost four years.
New orders and export sales both increased at manufacturing companies in India during December. While, the volume of incoming new work at manufacturers in India increased in December. The rate of growth was sharp, and the fastest in six months. New export orders also expanded, and at a solid pace. The new orders sub-index in the survey, a reliable gauge of future output, jumped to 58.0 from 55.8 in November, its biggest monthly jump since April, indicating that the factory sector might be in for better days ahead.
Further, December data signalled job creation in the Indian goods-producing sector, amid reports of higher production requirements. However, labour shortages and demand for higher salaries weighed on payroll numbers.
Meanwhile, input prices in the Indian manufacturing sector also rose for the forty-fifth consecutive month. According to the companies monitored, the rise in input costs reflected increased raw material prices, stronger demand and un-favourable exchange rates. Consequently, average selling prices rose again.
Nevertheless, the survey, which expects higher growth on account of firmer demand, also pointed at Inflation pressures remaining firm in the coming months. However, after rising to the highest level in the year for the month of September, the wholesale price index (WPI), India's main inflation gauge, unexpectedly cooled down to 7.24% (Provisional) for the month of November, 2012.
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