Bengaluru: The manufacturing sector ends 2021 on a solid footing with the growth of new orders and the remaining output is sharp despite losing momentum in December, but increasing price pressure is still a concern, a private survey shows.
Manufacturing purchase manager index, compiled and collected by IHS Markit December 6-17, fell to 55.5 in December from November 57.6 even though it remained above 50 signs that separated the growth of contractions for the sixth month.
The results of the survey strengthened evidence of sustainable recovery in the third largest economy in Asia from the decline induced by the Coronavirus pandemic.
That and the increase in price pressure can increase the hope that India’s reserve bank will tighten monetary policy earlier than those considered, like some other central banks.
“The results of the last 2021 PMI for the Indian manufacturing sector are encouraging, with the economic recovery continuing because the company managed to secure new jobs from domestic and international sources,” Pollyanna de Lima, Director of Economic Associate in IHS Markit, said in the release.
“Higher sales demand further increase in production and companies carried out with their restocking efforts.” While the latest surveys showed a new sub-index order, a proxy for domestic demand, slipping to 58.4 in December, remained above the long-term average because the measure was introduced in March 2005.
It encouraged the company to maintain strong output.
Optimism about future output was strengthened last month, but concerns about supply chain disorders, the rapid spread of new omicron variants from Coronavirus and inflationary pressure reduces sentiment.
The work slipped back to the contraction area last month after growing in November for the first time since July; However, the speed of shedding work is marginal.
Although input costs rise sharply at the speed of the trend above, the inflation of the output price subsides to a 14-month low because the company does not forward the full load to consumers.
“There are tentative signs that inflationary pressure begins to subside, but the company is not sure that the trend will continue,” added De Lima.
“Although it is easier in December, the inflation of input costs is still running with one of the highest rates at around seven and a half years.
Most companies still decide to keep their selling prices unchanged, to increase sales, with overall cost only a little in December Of course.
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