Manufacturing output expands at fastest pace in 6 months

Updated: Wednesday, January 2, 2013, 11:39 [IST]

The seasonally adjusted HSBC Purchasing Managers' Index - a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy - posted 54.7 in December, up from 53.7 in November.

The latest reading signalled a further improvement in the health of the Indian manufacturing sector. Output at manufacturing companies in India rose during December, amid reports of higher order book volumes.

With almost one-third of panellists indicating higher production and 18% noting a decline, the overall rate of growth was sharp and the fastest in six months. Growth has now been sustained for 45 successive months. The volume of incoming new work at manufacturers in India increased in December. The rate of growth was sharp, and the fastest in six months.

New export orders also expanded, and at a solid pace. Anecdotal evidence suggested that total new work rose in line with the launch of new products and strengthening demand. December data signalled job creation in the Indian goods-producing sector, amid reports of higher production requirements.

However, there were mentions that labour shortages and demand for higher salaries weighed on payroll numbers.

Whereas 5% of monitored companies reported increased staffing levels, the majority (91%) indicated no change. Subsequently, the overall pace of expansion was only slight. Manufacturers in India signalled higher backlogs of work during December, amid reports of persistent powercuts. The rate of accumulation was sharp, and the fastest in the series history.

Meanwhile, stocks of purchases rose, albeit moderately. Panel members increased their input buying in line with anticipated rises in demand. In contrast, post-production inventories fell for the third successive month, but only modestly.
Input prices in the Indian manufacturing sector rose for the forty-fifth consecutive month.

According to monitored companies, the rise in input costs reflected increased raw material prices, stronger demand and unfavourable exchange rates. Consequently, average selling prices rose again.

Purchasing activity in the Indian manufacturing sector increased for the forty-fifth consecutive month in December. With 26% of panellists signalling higher input buying and 15% noting a fall, thhe overall pace of growth was sharp and the fastest since June.

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