The Manufacturing PMI increased from 55.7 in November to 57.8 in December. The latest December figure took the PMI average for the third quarter to its highest value (56.3) since December 2021. A PMI reading above 50 indicates expansion in manufacturing activity. PMI Manufacturing has been increasing every month since October 2022.
Pauliana de Lima, Economics Associate Director at S&P Global Market Intelligence, said, “While some may question the resilience of the Indian manufacturing industry in 2023 amid a worsening outlook for the global economy, manufacturers may be fully confident of their ability to increase production from current levels.” I had confidence.” , said in a note.
This is believed to ensure that the PMI captures economic activity in the formal sector more than in the informal sector. Most private and institutional forecasts, including those of the Reserve Bank of India (RBI), expect the Indian economy to lose growth momentum in the second half of the fiscal year (October 2022- March 2023) as compared to the first half. Headline GDP growth, which was 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 jump in PMI value in December was due to resilience in demand conditions, which boosted manufacturing sales growth. Some experts believe that strong advertising, product diversification and favorable economic conditions fueled December’s sales growth. “Less challenging supply chain conditions also supported the upside. Delivery times were reportedly stable, which enabled firms to secure critical raw materials and boost their input stocks,” De Lima said.
Indian manufacturing is facing its share of headwinds from the slowing global economy. “New orders from abroad grew at the slowest pace since August 2022, as many companies reportedly struggled to secure new work from key export markets,” the note said.