India's manufacturing industry finished 2022 on a solid note as business conditions improved at the fastest rate in over two years, a business survey showed. The manufacturing purchasing managers' index, compiled by S&P Global, rose to 57.8 in December from November's 55.7. The December reading was better than a Reuters poll median forecast for 54.3. The December was also the highest since October 2020.
“Following a promising start to 2022, the Indian manufacturing industry maintained a strong performance as time progressed, wrapping the year with the best expansion in production seen since November 2021. Demand strength took centre stage among the reasons provided by firms for improvements in many measures. Additional materials were purchased and extra workers hired as companies sought to supplement production and maintain healthy levels of inventories," said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
Today's data cemented views that Asia's third-largest economy is better placed than many other emerging economies to weather the impact of a potential global recession.
"While some may question the resilience of the Indian manufacturing industry in 2023 amid a deteriorating outlook for the global economy, manufacturers were strongly confident in their ability to lift production from present levels," the S&P economist said.
According to the survey, demand resilience boosted sales growth in December, with the rate of increase picking up to the quickest since February 2021.
International demand for Indian goods also improved, but did so to a lesser extent than in November, the survey said. Overall, new orders from abroad rose at the slowest pace in five months as several companies reportedly struggled to secure new work from key export markets.
Cost pressures, according to the survey, remained relatively muted in December, with the overall rate of inflation little-changed from November and the second-slowest since September 2020.
“Underlying data indicated that price reductions for some raw materials partly offset increases elsewhere. Moreover, for the first time in close to two-and-a-half years, the rate of inflation for selling prices outpaced that seen for input costs,"the survey said.
According to the survey, companies were were optimistic in their year-ahead outlook for production. Demand buoyancy were cited among the key opportunities to growth prospects.
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