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.