India's manufacturing output rises to 13-mth high, factories end 2022 on a positive note

The manufacturing purchasing managers’ index, compiled by S&P Global, rose to 57.8 in December from November’s 55.7. This reading is the highest since October 2020 and above the 50-mark that separates growth from contraction for an 18th straight month.

The PMI average for the third fiscal quarter (56.3) was the highest recorded since one year ago, data showed.

“Following a promising start to 2022, the Indian manufacturing industry maintained a strong performance as time progressed, wrapping the year with the best expansion in production seen since November 2021,” Pollyanna De Lima, economics associate director at S&P Global Market said in a statement.

“Demand strength took centre stage among the reasons provided by firms for improvements in many measures. Additional materials were purchased and extra workers hired as companies sought to supplement production and maintain healthy levels of inventories. Input stocks rose at a near-record pace.”

While both new orders and output continued to grow strongly exports rose at the slowest pace in five months as slowing global demand weighed on exports. Rising domestic demand, however, did little to improve conditions in the labour market as the rate of job creation eased to a three-month low.

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While input price inflation remained relatively muted in December, the prices manufacturers charged for their goods rose at the quickest pace since mid-2022.

International demand for Indian goods improved but did so to a lesser extent than in November.

New orders from abroad rose at the slowest pace in five months as several companies reportedly struggled to secure new work from key export markets

Optimism about the next 12 months was little changed, remaining close to historical highs. The index only dipped from November when it was the highest in over seven-and-a-half years.

“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,” added De Lima.

When assessing the year-ahead outlook for production, companies were optimistic. Advertising and demand buoyancy was cited in the survey as the key opportunities to growth prospects .