Nikkei India Manufacturing PMI® : Marked Rise In Sales Underpins Production Growth
Key points :
* Second-fastest upturn in order books in 2018
* Output expands at solid, albeit softer, pace
* Weakest rise in input costs for 34 months leads to stable charges
Data collected December 5-17:
The health of India’s manufacturing economy improved further at the end of the year, as companies continued to scale up production and -employment in response to strong inflows of new business. December data also brought news of a notable slowdown in input cost inflation, to a 34-month low, which translated into broadly no change in factory gate charges.
Posting 53.2 in December, from 54.0 in November, the Nikkei India Manufacturing Purchasing Managers’ Index® (PMI®) was consistent with a further improvement in operating conditions across the sector. The latest figure was the second greatest in 2018 and contributed to highest quarterly average since Q3 FY 2012.
Growth of new work remained robust at the end of the quarter, with the upturn the second-quickest since December 2017. Companies that experienced greater inflows of new orders mentioned expanded client bases, stronger demand and fruitful advertising. International markets contributed to sales growth, with exports rising for the fourteenth month in a row.
Despite easing from November, the rise in production was among the quickest seen in 2018. Firms suggested that greater sales and technological progress supported the increase in output. Growth was curtailed by competitive pressures, labour issues and challenging public policies.
Employment continued to expand in December, but companies still signalled increased volumes of work-in-hand. The upturn in jobs was the slowest in four months, while backlogs were accumulated to the quickest extent since May.
Holdings of manufactured goods in India decreased again at the end of the year as firms sought to fulfil orders from stocks. The pace of depletion was solid and the joint-fastest in three months.
In contrast, input inventories rose for the tenth successive month.
The key factor enabling companies to rebuild their input stocks was another increase in quantities of purchases. The upturn matched the solid pace noted in November, to be the joint-quickest in 11 months. At the same time, suppliers’ delivery times were broadly unchanged in December.
Goods producers reported that higher prices for materials, especially steel, resulted in another increase in overall cost burdens. That said, the rate of inflation eased to a 34-month low. The rise was marginal and much softer than seen on average over the survey history.
Easing cost inflationary pressures translated into unchanged selling prices, thereby ending a 16- month sequence of charge inflation. Efforts to boost sales were also reported as a reason preventing firms from hiking their fees.
Looking ahead, companies predicted that marketing initiatives, capacity expansions and forecasts of further improvements in demand will boost output in the coming year. That said, the level of confidence moderated from mid-quarter and was subdued in the context of historical survey data.