The pace of manufacturing activity slows in November, the PMI falls to its 3-month low

NEW DELHI: Growth in the Indian manufacturing sector lost momentum in November due to slower increases in factory orders, exports, purchase levels and production, as Covid-19 restrictions caused a further decline in sales. payroll figures, a private poll showed on Tuesday.

The IHS Markit India Manufacturing Purchasing Managers Index (PMI) fell to a three-month low of 56.3 in November from a more than 12-year high of 58.9 in October. A reading above 50 on the index indicates expansion.

All three broad areas of the manufacturing industry registered expansion, with growth led by consumer goods, which was the only sector that posted a stronger rate of increase, the survey showed.

“India’s manufacturing sector remained on the right path to recovery, with strong new order growth and sustained production through November,” Pollyanna De Lima, Associate Director of Economics at IHS Markit.

Manufacturing in India grew 0.6% year-on-year in the September quarter, even as the pace of contraction in the Indian economy slowed to 7.5% from the 23.9% contraction in the last quarter.

According to the survey, easing of pandemic-related restrictions, combined with an improvement in market conditions and a rebound in demand, supported another increase in production.

De Lima said that while the moderation in the expansion rates observed in the last month does not represent a major setback, since they are below the highs of more than a decade in October, an increase in the cases of Covid-19 and The possibility of associated restrictions could undermine the recovery, as the pandemic was the key factor weighing on growth last month, and the uncertainty related to Covid-19 also restricted business confidence.

“For now, companies are projecting sustained demand growth in the short term and responded to this by increasing the purchase of inputs to increase their safety stocks,” he said.

However, employment remained in contraction territory, with companies reportedly keeping the minimum number of workers possible according to government guidelines, and the firing rate was “solid” and little changed since October.

Business optimism faded slightly in November. Production growth is still forecast for next year, but public policy concerns, the depreciation of the rupee and the pandemic weighed on overall sentiment, according to the survey.