India Manufacturing activity rose in December while jobs declined, PMI at 56.4

Jan 04, 2021

As per the survey, performance of the manufacturing industry for the third quarter of FY21 was “notably better” than in the second quarter. The three-month PMI average rose from 51.6 to 57.2. In December, new export orders increased at the slowest pace in the current four-month sequence of expansion.

The health of the India’s manufacturing sector continued to strengthen at the end of 2020 with manufacturers stepping up production in December even though employment decreased and the degree of optimism weakened, a private survey showed on Monday.

The IHS Markit India Manufacturing Purchasing Managers’ Index was at 56.4 in December, a tick higher than November's reading of 56.3 and above the critical 50 threshold, that differentiates expansion from contraction, for the fifth straight month.

“The latest figure was consistent with a marked improvement in business conditions across the sector,” IHS Markit said in its monthly update on the country’s factory sector.

However, it said that one area that failed to improve was employment, with jobs shed once again at the end of 2020.

As per the survey, that was conducted between December 4-17, factory orders rose last month reflecting the loosening of Covid-19 restrictions, strengthening demand and improved market conditions.

“The latest PMI results for the Indian manufacturing sector continued to point to an economy on the mend, as a supportive demand environment and firms' efforts to rebuild safety stocks underpinned another sharp rise in production,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.

As per the survey, performance of the manufacturing industry for the third quarter of FY21 was “notably better” than in the second quarter. The three-month PMI average rose from 51.6 to 57.2.

In December, new export orders increased at the slowest pace in the current four-month sequence of expansion.

The survey highlighted that employment decreased in December, thereby stretching the current sequence of job shedding to nine months. Companies stated that government guidelines to have employees working only on shifts and difficulties in finding suitable staff were the key factors causing the latest fall in payroll numbers.

“Once again, the survey brought the bad news of falling employment,” De Lima said, adding that the rate of contraction softened to the weakest in the current nine-month period of reduction.

While Indian manufacturers maintained an upbeat view that output will increase in the coming year, the degree of optimism weakened to a four-month low as some firms were concerned about the lasting effect of the Covid-19 pandemic on the global economy, according to the survey.

Source: The Economic Times