India manufacturing PMI hits 3-month high in November as new orders surge

NEW DELHI: India’s factory activity expanded at its fastest pace in three months in November as new orders and exports expanded boosted by demand resilience and substantial easing of input cost pressure, according to a monthly survey released on Thursday.

The Manufacturing Purchasing Managers‘ Index, compiled by S&P Global, rose to 55.7 last month from with 55.3 in October, signalling the strongest improvement in operating conditions in three months.

A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction.

The November PMI data points to the seventeenth successive expansion in manufacturing production across India, as companies responded to increases in new work intakes. The upturn in output was sharp, above trend, and the strongest since August.

“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 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,“ said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

Survey participants were also strongly confident in both the buoyancy of demand for their goods and their ability to further lift production in 2023. 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. Buyers of Indian manufactured goods likewise gained from this retreat in cost inflation, as 92% of surveyed firms left their selling prices unchanged from October,” as per the survey report.

Data released on Wednesday showed that India’s economic growth slowed to 6.3% last quarter as distortions caused by covid-19 lockdowns faded.

On the jobs front, the survey said that employment rose solidly, and for the ninth month in a row.

The S&P Global India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.