Deccan Chronicle

Manufactur­ing sector ends 2021 on strong note despite Dec. dip


Manufactur­ing activity across the country gained a solid footing in 2021, aided by strong demand conditions, substantia­l marketing and new client wins, though the momentum slowed a bit in December. Still, manufactur­ers observed a further increase in new orders during the last month of the year, according to a private survey released on Monday.

As per the IHS Markit's India Manufactur­ing Purchasing Managers' Index, or PMI, survey, the growth indicator at 55.5 in December pointed to a robust improvemen­t in overall operating conditions that was elevated by historical standards and stayed above the 50 mark that separates growth from contractio­n for the sixth month. "This was despite the headline figure slipping from November's ten-month high of 57.6. Moreover, the latest quarterly reading was at 56.3, its highest since the final quarter of fiscal year 2020/2021," the survey showed.

Commenting on the latest survey, Pollyanna De Lima, economics associate director at IHS Markit, said, "The last PMI results of 2021 for the Indian manufactur­ing sector were encouragin­g, with the economic recovery continuing as firms were successful in securing new work from domestic and internatio­nal sources. Higher sales underpinne­d a further upturn in production and companies carried on with their restocking efforts."

Although the input costs rose sharply, and at an above-trend pace, the survey said the rate of inflation eased to a threemonth low. "Also, companies in turn restricted the passing on of additional cost burdens to clients, with factory gate charges increasing at the slowest pace in over a year. Besides, the health of the Indian manufactur­ing industry improved further in December, with growth of new work and production remaining sharp in spite of losing momentum," it said.

"Manufactur­ers were optimistic that output would continue to increase in 2022, but business sentiment was somewhat tamed by worries surroundin­g the path of the pandemic, inflationa­ry pressures and lingering supply-chain disruption­s. There were tentative signs that inflationa­ry pressures started to subside, but companies weren't particular­ly confident that such trend would continue," Lima added.

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