Manufacturing sector activity slows to 53.2 in December
manufacturing sector activity in December slowed down from the previous month, but ended the previous year on a high as companies continued to expand production and employment in response to strong inflows of new business orders, a monthly survey said on Wednesday, 2 January.
The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) eased to 53.2 in December, from 54 in November.
Despite the easing from November, the increase in production was among the quick- est seen in the previous year.
This is the 17th consecutive month that the manufacturing Purchasing Managers’ Index remained above the 50-point mark.
In Purchasing Managers’ Index parlance, a print above 50 means expansion, while a score below that denotes contraction.
“The Indian Manufacturing Purchasing Managers’ Index indicated that the sector ended 2018 on a high, with growth stronger than seen at the start of the year,” Pollyanna De Lima, Principal Economist at IHS Markit and author of the report said, adding that companies benefitted from growing international demand for Indian goods as export orders expanded for the fourteenth straight month. The December Purchasing Managers’ Index figure was the second highest in 2018 and contributed to the highest quarterly average since the third quarter of financial year 2012.
“It’s particularly encouraging to see the quarterly Purchasing Managers’ Index average climb to its highest mark since the third quarter of fiscal year 2012, suggesting that the sector made a robust contribution to gross domestic product (GDP),” Lima added.
On the prices front, there was a notable slowdown in input cost inflation to a 34-month low.
“These signs of easing inflationary pressures indicate that we are likely to see the Reserve Bank of India (RBI) adopt an accommodative monetary policy stance in early 2019,” Lima said.
The next meeting of the Reserve Bank of India’s Monetary Policy Committee is scheduled for between 5 and 7 February.
Meanwhile, job creation weakened, with companies turning cautious about making hiring decisions ahead of the general election athat is scheduled for later this year and a less upbeat optimism towards the employment outlook.
Looking ahead, the companies predicted that marketing initiatives, capacity expansions and forecasts of further improvements in demand will boost output in the new year.