India's manufacturing growth maintains robust pace in November
In November, India's manufacturing sector showed continued expansion, as per the data released by S&P Global today. The Manufacturing Purchasing Managers' Index (PMI) climbed to 56.0 last month. This marked a rise from an eight-month low of 55.5 recorded in October. Notably, November's index, indicating the manufacturing sector's activity, has remained above the critical 50 mark - signifying expansion rather than contraction - for the 29th consecutive month.
Output and new orders expand, job creation rises
In November, production and new orders grew at a faster rate than the previous month, while job creation increased for the eighth consecutive month. Business confidence for the next year remained high, with the future output sub-index at 62.2. However, this was a seven-month low due to rising inflation expectations, according to the survey note. Despite robust domestic demand, international demand suffered, with new export orders hitting a five-month low.
What next for India?
Pollyanna De Lima, Economics Associate Director at S&P Global, stated, "India's manufacturing economy is clearly in good shape as 2023 draws to a close, with expectations for a continued strong performance in 2024." India's retail inflation eased in October but remained above the Reserve Bank of India's (RBI) 4% medium-term target. Last month, RBI Governor Shaktikanta Das warned about India's susceptibility to frequent food price shocks and emphasized the central bank's focus on managing inflation while supporting economic growth.
Input costs grow slowly, inflation concerns persist
Input costs rose at the slowest pace since July 2020, but not all benefits were passed on to consumers as output price inflation only dropped to a seven-month low. De Lima explained, "Prices for raw materials and components still rose in November, but improved availability at suppliers amid subdued global demand for inputs led to a considerable retreat in cost pressures." She also noted, "Some concerns over prices increasing in the near-term were reflected in the data for business sentiment."
