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India’s manufacturing sector lost some momentum in December, with IHS Markit’s Purchasing Managers Index (PMI) cooling to 55.5 from a 10-month high of 57.6 a month before.
A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction.
According to the findings of an IHS Markit survey, released on January 3, Indian manufacturers continued to see a sharp rise in new work and production.
“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,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
While December saw new orders for the manufacturing sector rising at the slowest pace since September, international orders accelerated for the sixth straight month.
The manufacturing PMI may have declined in December, but it averaged 56.3 in the last quarter of 2021 – the most since the January-March quarter 2021.
Supply chain disruptions and risks from inflation, however, continue to impact sentiment.
According to IHS Markit, Indian manufacturers’ input costs rose sharply in December, although the rate of inflation declined to a three-month low. However, it remained above its long-term average.Higher input prices were passed on to consumers in a limited fashion, with the rate of inflation for output charges weakest since October 2020.
Manufacturers continued to report longer lead times on inputs, with vendor performance deteriorating the most since August 2020. “Delays were commonly associated with raw material scarcity among distributors,