PMI of manufacturing sector above 50 mark for fifth consecutive month, signs of improvement in economy
The manufacturing activity of the country registered a strong trend in December due to intensifying production and input purchases by manufacturers. A monthly survey released on Monday revealed this. Manufacturers are now trying to regain their reserves after trading closed for several months in the last year. That is why they are accelerating production and input procurement.
PMI is above 50 for the fifth consecutive month: IHS Market on Monday released the India Manufacturing Procurement Management Index (PMI). It stood at 56.4 for December 2020, slightly above 56.3 for November 2020. This is the fifth consecutive month when the PMI of manufacturing is above 50. If the PMI is more than 50, it indicates a spurt in activity. A PMI of less than 50 indicates contraction.
Signs of improvement in the economy: Paulina de Lima, assistant director of economics at IHS Market, said, ‘The recent PMI of the Indian manufacturing sector shows that the economy is improving. The demand-driven environment and the companies’ efforts to re-create safe reserves have further accelerated production. The entire manufacturing sector has shown improvement in business conditions.
International demand for Indian goods increased: He said, ‘Out of the three sub-sectors that have been considered, detail has been registered in both sales and production parameters. It is important to emphasize the macro nature of revival. International demand for Indian goods increased in December. However, growth has been adversely affected due to Covid-19. As a result, export orders grew at the slowest pace in December during the most recent four months of expansion. Production growth remained strong, but also hit a four-month low.
Inflation at a 26-month high: On the employment side, it has weakened once again in December. This has led to this ninth consecutive month of loss of employment. The survey said, “The companies said that the government’s guidelines to work in shifts and difficulties in finding suitable workers are the main causes of loss in terms of employment. However, the pace of decline has come down and it is the lowest in the current order of decline. In terms of prices, according to the survey, inflation in input costs reached a 26-month high in December.
Three-month average PMI reached 57.2: The parties surveyed believe that the prices of chemicals, metals, plastics and clothing have gone up. The output price has also increased due to rising input costs. However, the output price increase has been modest. Lima said that when we combine the most recent three-month figures, we find that the manufacturing performance in the third quarter has been better than the second quarter. The three-month average PMI has risen from 51.6 to 57.2.
He said that the perception of Indian manufacturers about the increase in output in the coming years remains intact. However, this optimism is at a four-month low, as some companies are concerned about the long-term impact of the Covid-19 epidemic on the global economy.
