BENGALURU: India manufacturing sector It ended roughly 2020 on a stronger note as manufacturers increased production to meet growing demand, a private survey showed on Monday, although the employment situation worsened as companies continued to downsize.
Manufacturing has been one of the main drivers of recovery in Asia’s third-largest economy after a coronavirus-induced slump earlier in the year. Business activity is slowly improving after contracting at an annual rate of 23.9% and 7.5%, respectively, in the April-June and July-September quarters.
The Nikkei Manufacturing Purchasing Managers Index, compiled by IHS Markit, rose slightly to 56.4 in December from 56.3 in November, above the 50 level that separates growth from contraction for the fifth month.
“The latest PMI results for Manufacturing sector continued to point to a recovering economy, as a supportive demand environment and efforts by companies to rebuild safety stocks underpinned another strong increase in production, “said Pollyanna De Lima, associate economics director at IHS Markit.
Both new orders and production continued to grow strongly, albeit at a slower pace. New export orders rose at the slowest pace in four months as a recent spike in coronavirus cases dampened demand abroad.
However, rising demand failed to improve conditions in the labor market and manufacturers continued to cut jobs.
“Once again, the survey brought the bad news of falling employment. However, the employment trend is at least moving in the right direction, as the rate of contraction softened to the weakest in the current period. reduction of nine months, “added De Lima.
Input prices rose at the fastest rate in more than two years, threatening to reduce profit margins as manufacturers were unable to fully pass the rising costs on to customers.
That could keep headline inflation above the Reserve Bank of India’s medium-term target range of 2-6% for the next several months, reducing the chances of policy easing by the central bank.
Optimism about the next 12 months fell to a four-month low in December amid growing concern over mounting price pressures and the economic impact of the pandemic.
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