Global Economy

Manufacturing hits 10-month high in November, PMI at 57.6

Manufacturing activity in India grew at its fastest pace in 10 months in November, driven by strengthening demand and improving market conditions amid tentative signs of an improvement in hiring activity, a private survey showed on Wednesday. Companies scaled up input buying, which in turn led to the second-quickest accumulation in stocks of purchases in 17 years.

The IHS Markit India manufacturing purchasing managers’ index (PMI) rose to 57.6 in November from 55.9 in October. A reading above 50 indicates expansion while below 50 denotes a contraction in economic activity.

As per the survey report, underlying data suggested that the domestic market was the main source of sales growth, as new export orders rose at a slight pace that was weaker than in October.

Buoyed by the pick-up in demand, companies stepped up production volumes during November, an output rose sharply and at the fastest rate in nine months.

“The fact that firms purchased additional inputs at a stronger rate amid efforts to restock, combined with recurring declines in inventories of finished goods and tentative signs of a pick-up in hiring activity, indicate that production volumes will likely expand further in the near-term,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.

November data pointed to an improvement in hiring activity among goods producers. Although fractional overall, the latest expansion was only the second over the past 20 months.

“The key threat to the outlook, in addition to potential new waves of Covid-19, is inflationary pressures,” De Lima said, adding that for now, companies are absorbing most of the additional cost burdens and lifting output charges only moderately.

“Should raw material scarcity and shipping issues continue to feed through to purchasing prices, substantial increases in output charges could be seen and demand resilience would be tested,” she said.

Though manufacturers remained upbeat towards growth prospects, the overall level of positive sentiment slipped to a 17-month low as companies were concerned that inflationary pressures could dampen demand and restrict output in the year ahead.


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