According to a monthly survey, the IHS Markit India Manufacturing PMI rose to 51.2 in November from 50.6 in October. However, the rise remained subdued compared to earlier this year and the survey history, where it had fallen to a two-year low. In PMI parlance, a print above 50 means expansion whereas a score below 50 means contraction.
Pollyanna de Lima, Principal Economist at IHS Markit said that after pulling back noticeably in October, manufacturing sector growth displayed a welcoming acceleration in November. “Still, rates of expansion in factory orders, production and exports remained far away from those recorded at the start of 2019, with subdues underlying demand largely blamed for this,” she adds.
According to the survey, the reason behind growth of manufacturing activity in November is the launch of new products and better demand, though restrained by competitive pressures and unstable market conditions.
“Some level of uncertainty regarding the economy was evident by a subdued degree of business optimism. Also, companies shed jobs for the first time in over a year-and-a-half and there was another round of reduction in input buying. The weakness of these forward-looking indicators suggest that firms are bracing themselves for challenging times ahead,” said Lima.
She further noted that PMI data continued to show a lack of inflationary pressures in the sector which, combined with slow economic growth, suggests that the RBI will likely extend its accommodating policy stance and further reduce the benchmark interest rate during December.