India’s manufacturing sector ended 2021 on a strong footing with growth in new orders and output remaining sharp despite losing some momentum in December, but elevated price pressures were still a concern, according to a survey by IHS Markit, whose manufacturing purchasing managers’ index (PMI) for December 6-17 fell to 55.5 from November’s 57.6.

A figure of 50 separates growth from contraction.

The survey results reinforce evidence of a continued recovery in Asia’s third-largest economy from the coronavirus pandemic-induced slump. That and rising price pressures may add to expectations the Reserve Bank of India will tighten monetary policy earlier than thought, like some other central banks.

India’s manufacturing sector ended 2021 on a strong footing with growth in new orders and output remaining sharp despite losing some momentum in December, but elevated price pressures were still a concern, according to a survey by IHS Markit, whose manufacturing purchasing managers’ index (PMI) for December 6-17 fell to 55.5 from November’s 57.6.

“The last PMI results of 2021 for the Indian manufacturing sector were encouraging, with the economic recovery continuing as firms were successful in securing new work from domestic and international sources,” Pollyanna De Lima, economics associate director at IHS Markit, said in a release.

“Higher sales underpinned a further upturn in production and companies carried on with their restocking efforts,” she said.

While the latest survey showed the new orders sub-index, that evaluates domestic demand, slipped to 58.4 in December, it remained above the long-term average since the gauge was introduced in March 2005. That encouraged firms to maintain solid output.

Optimism about future output strengthened last month, but concerns about supply-chain disruptions, the rapid spread of the new Omicron variant of coronavirus and inflationary pressures dampened sentiment.

Employment slipped back into contractionary territory last month after growing in November for the first time since July; however, the pace of job shedding was marginal.

Although input costs rose sharply at an above-trend pace, output price inflation eased to a 14-month low as firms did not pass on the burden fully to consumers.

“There were tentative signs that inflationary pressures started to subside, but companies weren’t particularly confident that such trend would continue,” De Lima said.

“Despite easing in December, input cost inflation was still running at one of its highest rates in around seven-and-a-half years. The vast majority of firms nevertheless decided to keep their selling prices unchanged, in order to boost sales, with overall charges up only marginally in December,” she added.

Fibre2Fashion News Desk (DS)