Home / Economy / Manufacturing PMI starts 2023 on weaker note; factory growth slowed to 3-month low

The manufacturing purchasing managers’ index (PMI) started 2023 on a weak note as output and sales growth slackened, according to a survey by S&P Global.

India's PMI fell to 55.4 in January 2023 from 57.8 in December, the private survey showed.

Still, it remained well above the 50-mark separating growth from contraction for the 19th straight month.

"Despite some loss of growth momentum, the sector looks set to at least remain in expansion mode as the the final quarter of the current fiscal year draws to a close. Rising backlogs and the purchasing of additional inputs suggested that companies will continue to lift output in the coming months. Less challenging supply-chain conditions meant that firms were able to secure critically inputs and rebuild their inventories as intended," Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence said.

Input prices ticked higher in January, amid reports of greater chemical, electronic component, energy, metal, and packaging costs. The rate of inflation quickened to a three-month high but was well below its long-run average.

Manufacturers reportedly lifted their selling prices in January, owing to the passing of higher input, transportation, and staff cost through to clients. The overall rate of charge inflation remained historically elevated, despite easing from December.

Growth in both output and new orders sub-indexes, which are indicators of demand strength, eased in January from December when output was at a 13-month high. Foreign demand continued to rise, although also at a slower pace.

"A key area of weakness seen in the latest PMI data was exports. Although manufacturers received new orders from international markets, the increase was slight at best and moderated considerably to a ten-month low," added De Lima.

The business expectations index, which measures optimism about the year ahead, sank to a six-month low, and employment generation was barely above the 50-neutral mark, dropping to a level last seen in August.

These indicators could help sway the RBI's stance. It is expected to make a final interest rate hike of 25 basis points this month and then focus on supporting economic growth which is seen slowing this year.

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