India’s factory activity grew at the fastest pace in three months in November, a private survey showed on Thursday, indicating resilient demand despite a deterioration in global economic conditions as input cost inflation fell to a two-year low. Consumer inflation in South Asia’s largest economy eased significantly to 6.77 per cent in October from a five-month high of 7.41 per cent in September, indicating that price rise may moderate and provide some relief to manufacturers.
The Manufacturing Purchasing Managers’ Index compiled by S&P Global rose to 55.7 last month from 55.3 in October, marking the seventeenth consecutive month of expansion in manufacturing output across India. The reading was comfortably above a Reuters poll average forecast of 55.0 and the 50-level separating growth from contraction.
“India’s manufacturing sector continued to perform well in November, despite fears of a recession elsewhere and a worsening outlook for the global economy,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
“It was business as usual for goods producers, who increased production volumes by the largest extent in three months, amid impressive evidence of the elasticity of demand.”
Strong demand, especially for consumer and intermediate goods, and marketing pushed the new orders sub-index to a three-month high. International demand grew for the eighth month in a row and at the same pace as in October. Input prices rose at the slowest pace in 26 months, providing some respite to manufacturers, and end-consumers also benefited, with selling prices rising at the lowest rate since February.
It improved overall business confidence with the Future Output sub-index at its highest level since February 2015. Reflecting the positive sentiment, employment grew at the fastest rate since January 2020 except in October.
PMI data may strengthen expectations for RBI India The economy is starting to take a hit from the past three consecutive 50 basis point hikes to opt for a smaller hike at its meeting next week.
Economic growth in India slowed to 6.3 per cent in the last quarter, much weaker than the 13.5 per cent growth reported in the previous three months, as distortions caused by the COVID-19 lockdown faded.
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