India's Manufacturing Industry Performed Well In November, Input Cost Inflation Slips To 40-Month Low

India's manufacturing sector activity continued to see a moderate increase in November, with the S&P Global Purchasing Managers' Index (PMI) rising to 56.0, up from October's eight-month low of 55.5, showed data released on Friday.

The S&P Global's PMI release showed that the expansion in India's manufacturing industry was seen as strengthening client demand and more favorable input supply boosted production volumes. The strengthening client demand indicated retreating inflationary pressures in the economy.

The PMI data comes one day after the data released by the National Statistical Office (NSO) on Thursday showed India's gross domestic product (GDP) rose 7.6% in the July-September period, with the manufacturing sector growing 13.9% year-on-year (YoY).

Inflationary pressures retreated, with purchase costs rising at the weakest pace since the current sequence of increases began in August 2020. Charges rose modestly, as the vast majority of firms opted to leave their fees unchanged since October.

A key feature of the latest results was a substantial easing of price pressures. Although average purchasing costs rose again, the rate of inflation eased to the lowest in the current 40-month sequence of increases and was negligible by historical standards.

Rising costs translated into increased selling prices, albeit one that was the weakest in seven months. Manufacturers that hiked their fees, which were fewer than 7% of panelists, mentioned demand strength, greater labor costs, and the usage of higher-quality inputs in production processes.

November data showed another substantial increase in overall levels of new work received by Indian goods producers. Moreover, the growth rate improved from October's one-year low and outpaced the series average. Surveyed companies commonly reported positive demand trends, greater client requirements and favorable market conditions.

Purchasing activity and stocks of inputs rose during November, in many cases owing to buoyant demand conditions. Finished goods inventories fell, however, as manufacturers found themselves digging into warehouses to fulfill sales requirements

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said: "India's manufacturing industry maintained its robust performance in November, with output regaining growth momentum. Firms' ability to secure new business, both domestically and from abroad, remained central to the success of the sector."