India's manufacturing Purchasing Managers Index (PMI) rose to 56.4 in December 2020 from 56.3 in November, a monthly survey said on Monday. The index reading, measured by IHS Markit India and tacking sentiment in the manufacturing sector, has been above 50 for the fifth straight month, showing clear signs of recovery from the COVID-19 induced slowdown.
A reading of above 50 signifies an improvement in the sector, while a reading of below 50 indicates deterioration in sentiments.
In October, the manufacturing PMI reading was close to 58.9 in October, which was a 12-year high.
"The health of the Indian manufacturing sector continued to strengthen in December, with manufacturers stepping up production and input buying amid efforts to rebuild their inventories following business closures earlier in the year," said IHS Markit in a press release.
"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.
International demand for Indian goods rose in December, but the growth was hampered by the COVID-19 pandemic. As a result, new export orders increased at the slowest pace in the current four-month sequence of expansion. Output growth also eased to a four-month low, but remained strong, it said.
Employment, on the other hand, decreased again 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. However, the pace of contraction was moderate and the weakest in the current downturn period," the survey noted.