The Indian manufacturing sector displayed robust expansion in November, with accelerated sales contributing to the fastest growth in production in nine months. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI), adjusted for seasonal variations, climbed from 55.9 in October to 57.6 in November.
This marked the sector’s most significant improvement in health in ten months, well above its long-term average of 53.6. Despite this positive trend, there are concerns about inflationary pressures as a potential risk in the future.
In a statement on Wednesday, IHS Markit reported that companies increased input purchases, resulting in the second-quickest accumulation of purchase stocks in almost 17 years of data collection. Additionally, there were early indications of a recovery in hiring after three consecutive months of job cuts. Strengthening demand, improved market conditions, and effective marketing were cited by manufacturers as factors contributing to increased sales in November.
Factory orders experienced the fifth consecutive monthly increase, with the most rapid pace since February. Data suggested that the domestic market was the primary driver of sales growth, as new export orders increased at a slower pace than in October.
Driven by rising demand, companies elevated production volumes in November, marking the sharpest and fastest increase in nine months. The PMI, on a scale of 0 to 100, showed an overall increase compared to the previous month (above 50) and indicated an overall decrease (below 50).
Pollyanna De Lima, Economics Associate Director at IHS Markit, expressed optimism about the near-term production outlook, citing increased input purchases and signs of a pickup in hiring. However, she highlighted inflationary pressures as a significant risk to the manufacturing sector’s outlook. While companies are currently absorbing additional costs and moderately raising output charges, continued issues such as raw material scarcity and shipping challenges could lead to substantial output charge increases, testing demand resilience.
The PMI, compiled by IHS Markit, reflects responses from around 400 manufacturers’ purchasing managers and serves as an indicator of the sector’s direction of change compared to the previous month.
