Manufacturing sector activities showed a marginal improvement in December
Published On: Monday, January 4, 2021 | By: Team KnowMyStock
Indian manufacturing sector activities showed a marginal improvement in December compared to the previous month even as employment generation remained low, showed the widely-tracked IHS Markit purchasing managers' index (PMI) survey. PMI inched up to 56.4 in December compared to 56.3 in November. However, it remained lower than 58.9 in October and 56.8 in September, the two months during which the economy saw a gradual lifting of lockdowns. A reading above 50 shows growth, while the print below 50 means contraction. Reflecting the loosening of Covid-19 restrictions, strengthening demand, and improved market conditions, factory orders increased during December. In response, firms lifted production again. In both cases, rates of expansion remained sharp despite easing to four-month lows.
International demand for Indian goods rose in December, but anecdotal evidence indicated that growth was hampered by the Covid-19 pandemic. As a result, new export orders increased at the slowest pace in the current four-month sequence of expansion.
Input cost inflation accelerated to a 26-month high in December, with panellists noting increased prices for chemicals, metals, plastics and textiles. Output charges were raised in response to rising cost burdens, but in this case the rate of inflation was only marginal.
Manufacturers believe that output will increase in the coming year. However, the degree of optimism weakened to a four-month low as some firms were expressed concerns over the lasting effect of the Covid-19 pandemic on the global economy.
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