Home / Economy / India factory activity in November hits 3-month high as inflation cools: PMI survey

India's factory activity expanded at its fastest pace in three months in November, demand despite deteriorating global economic conditions, according to a private survey. The Manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 55.7 last month compared with 55.3 in October, marking the seventeenth successive month of expansion in manufacturing production across India. The reading was also above a Reuters poll median forecast of 55.0.

“Demand resilience boosted manufacturing growth in India, with companies noting the quickest increases in new orders and production for three months. Moreover, firms were strongly confident towards growth prospects, with optimism driving another round of job creation and restocking initiatives," the survey said.

India’s consumer price gains fell below 7% for the first time in three months in October. Finance Minister Nirmala Sitharaman expects strong growth and lower inflation next year, as central bank authorities seek to stabilize Asia’s third-largest economy amid tough global headwinds.

“External factors were very strong in the inflation-targeting exercise," Sitharaman said on Wednesday at an event, noting that they were beyond the control of the government and the Reserve Bank of India. “We expect currency volatility to settle on its own."

GDP data released on Wednesday showed growth in India slowed to 6.3% last quarter as distortions caused by COVID-19 lockdowns faded.

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said: “India's manufacturing sector continued to perform well in November, besides heightened recession fears elsewhere and a deteriorating outlook for the global economy. It was business as usual for goods producers, who lifted production volumes to the greatest extent in three months amid impressive evidence of demand resilience. New orders and exports expanded markedly in the latest month."

Survey participants were also strongly confident in both the buoyancy of demand for their goods and their ability to further lift production in 2023, she said, adding that the level of positive sentiment recorded in November was the best in nearly eight years.

Companies, she said, were also aided by a substantial cooling of cost pressures in November, a factor that prompted them to purchase more inputs and add to their inventories.

“The overall rate of input cost inflation slipped to the joint-lowest in 28 months. " (With Agency Inputs)

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