Bengaluru: The growth of Indian factory activity slowed to a four-month low in January because Covid-19 Curbs injured new orders and outputs, while high price pressure burden business trust about the next year, a business survey showed.
The manufacturing purchase manager index, compiled and collected by Markit IHS from January 12-25, fell to 54.0 in January from 55.5 December.
While the latest readings slightly lower than 54.6 expected in Reuters polls, the index strongly above 50 signs that separate the growth of contractions for the seventh month.
It adds to the evidence that the Omicron Coronavirus variant is likely to give a few barriers to the third largest economy in Asia compared to devastating delta variants.
“The results of the latest PMI show that the new wave of Covid-19 has a mild impact on the performance of the Indian manufacturing sector,” Pollyanna de Lima, Director of Economic Associate in IHS Markit, in the release.
“A number of steps such as output, new orders and input purchases remain in expansion mode.
Although the growth rate subsides, they have historically strong.” New sub-index orders, proxies for domestic demand, fell to 56.6 from 58.4 December, the lowest since September, leading companies to reduce their workforce for one consecutive month.
Manufacturing output growth also fell to a four-month low.
The business expectation index, which measures optimism about the next year, sank to the lowest level of 19 months in January amid sustainable concerns around the price of pandemic and high prices.
While the input cost inflation subsides for the third month in January, remains high and the business continues several higher prices to consumers, showing a specter of higher inflation here to stay.
It can add pressure on the Reserve Bank of India to tighten monetary policy faster than expected, such as several other central banks.
“Survey participants are worried that production growth will be hampered by inflationary pressures, escalation of pandemic and new restrictions they will carry,” added De Lima.