India’s manufacturing activity, as measured by the Purchasing Managers’ Index (PMI), reached a 13-month high in December, according to the data released by the S&P Global Market Intelligence on Monday, indicating that 2022 ended on a positive note for the Indian manufacturers.
The manufacturing PMI rose to 57.8 in December, from 55.7 in November. The latest December figure also took the PMI average for the third quarter to its highest value (56.3) recorded since December 2021. A PMI reading above 50 indicates an expansion in manufacturing activity. PMI manufacturing has been rising every month since October 2022.
“While some may question the resilience of the Indian manufacturing industry in 2023 amid a deteriorating outlook for the global economy, manufacturers were strongly confident in their ability to lift production from present levels,” Pollyanna De Lima, economics associate director, S&P Global Market Intelligence, said in a note.
To be sure, PMI is believed to capture economic activity in the formal sector more than the informal sector. Most private and institutional forecasts, including that of the Reserve Bank of India (RBI) expect the Indian economy to lose growth momentum in the second half of the fiscal (October 2022- March 2023) compared to the first half. Headline GDP growth, which stood at 13.5% and 6.3% in the quarters ending June and September 2022, respectively, is expected to be 4.4% and 4.2% in the quarters ending December 2022 and March 2023.
The upsurge in the PMI value in December was due to the resilience in demand conditions, which boosted manufacturing sales growth. Some experts believe that robust advertising, product diversification, and favourable economic conditions boosted December sales growth. “Less challenging supply chain conditions also supported the upturn. Delivery times were reportedly stable, which enabled firms to secure critical raw materials and boost their input stocks,” De Lima added.
Indian manufacturing is facing its share of headwinds from the slowing global economy. “New orders from abroad rose at the slowest pace since August 2022 as several companies reportedly struggled to secure new work from key export markets, ”the note said.
