India's manufacturing PMI rises to highest in 2 years in December

• Indian Manufacturing PMI: According to the survey, companies were optimistic about their outlook for the coming year for production

India's manufacturing industry ended 2022 on a solid note as business conditions improved at the fastest pace in two years, a business survey shows. The Manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 57.8 in December from 55.7 in November. The December reading was better than the Reuters poll median forecast for 54.3. December was also the highest after October 2020.

“After a promising start to 2022, the Indian manufacturing industry maintained a strong performance as time progressed, wrapping up the year with the best expansion in production since November 2021. The strength of demand took center stage among the reasons provided by firms for the improvement in several measures. , Additional materials were purchased and additional workers were hired as companies sought to supplement production and maintain healthy levels of inventories," said Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence.

Today's data reinforced the view 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 worsening outlook for the global economy, manufacturers were confident of their ability to ramp up production from current levels," said the S&P economist.

According to the survey, demand resilience boosted sales growth in December, with the rate of increase the fastest since February 2021.

The survey said that international demand for Indian goods has also improved, but it has done so less than in November. Overall, new orders from abroad grew at their slowest pace in five months as many companies reportedly struggled to secure new work from key export markets.

According to the survey, cost pressures remained relatively low in December, with the overall rate of inflation little changed from November and the second slowest since September 2020.

"Underlying data indicated that price cuts for some raw materials were partially offset by increases elsewhere. Also, for the first time in nearly two-and-a-half years, the rate of inflation for selling prices exceeded that of input costs, said the survey.

According to the survey, companies were optimistic about their year-ahead outlook for production. A jump in demand was cited among the key opportunities for growth prospects.