Factory growth hits 10-month high in November on strong demand
India’s manufacturing activity grew at 10-month pace in November, boosted by strong demand, but higher inflationary pressures have factories worried about their future prospects , a separate survey showed Wednesday.
The easing of COVID-19 restrictions has boosted demand and boosted sales, suggesting the economy is on a path to normalization.
Compiled by IHS Markit, the Purchasing Managers’ Index rose to 57.6 in November from 55.9 in October. The index was the highest since January and the fifth consecutive month above the mark. 50, inhibiting growth and shrinking.
Pollyanna De Lima, chief economist at IHS Markit, said: “The Indian manufacturing sector continued to expand in November, with the collected growth and forward-looking indicators generally pointing to robustness. further improve in the coming months.”
“The fact that companies have been buying more inputs at a stronger rate amid resupply efforts, combined with the continued decline in finished goods inventories, and expected signs of Hiring activity increased, suggesting that production volumes are likely to expand further in the near term- term.”
New orders improved sharply – the strongest since February – mainly due to domestic demand. That led to output rising for the fifth straight month and at the fastest rate in nine months.
Companies increased headcount to meet soaring demand, ending a three-month decline, even though job creation has been slow.
But to some extent, optimism has been overshadowed by soaring input price inflation. Since October, the input price sub-index is at its highest level in nearly eight years due to supply constraints and rising transportation costs.
“If raw material scarcity and transportation issues continue to affect procurement prices, output fees will increase significantly and demand resilience will be tested,” said De Lima.
Output prices continued to rise moderately, indicating that companies have transferred some of the additional cost burden to customers.
The Reserve Bank of India is not expected to raise interest rates until at least the beginning of next financial year, but may consider raising rates earlier to curb inflation, according to a recent Reuters poll. broadcast.
India’s economy grew 8.4% in the July-September quarter from a year earlier, but economists say disruption from the emerging coronavirus variant Omicron risks slowing the recovery, particularly especially due to the country’s low vaccination rate.
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