Macroscope – Manufacturing PMI for the month November 2020

What is the latest Manufacturing PMI reading?

India Manufacturing PMI hit 3-month low in November coming in at 56.3. Last month in October, it recorded the highest figures in 12 years at 58.9. However, the reading maintained growth trajectory for 4th month in a row.

A reading above 50 denotes expansion and below 50 denotes contraction.

The Indian manufacturing sector continues to remain on the right path to recovery, with strong growth of new orders and output in November. The softening of expansion does not represent a major setback, as values are compared to decadal highs observed in previous month.

The 3 verticals of manufacturing industry recorded expansion, with growth led by consumer goods, which was the only sector to see a stronger rate of increase

Loss in momentum is credited to slower increases in factory orders, exports, buying levels and outputs. Increase in costs, output charges further added to downward pressures, with spillover effects on drop in payroll figures.

New orders rose at the slowest pace in 3 months. However, the upturn was sharp and stronger than any seen for 8 years prior to September. Increased order accumulations and operating capacities sent mixed signals, as demand showed fervor but supply showed fever.

New export orders increased markedly in November, with demand picking up from key export markets. The pace of expansion eased from October’s recent high, however.
Improving market health & wealth resulted in increased output in current month. Although the slowest for 3 months, the rate of expansion in output was sharp and outpaced its long-run average.

A consistent downside in Job-loss maintained the same trend in current month. Much of it is credited to guidelines issued by the government. The progressive unlockings of the economy will help these figures see positive territory too.

Input prices continued to increase in November, with inflation accelerating to a 9-month high and outpacing its long-term average. Selling prices followed suit, rising by par-plus rate. However, rate of increase continues to be below historical averages.

Looking ahead, manufacturing firms are foresee growth business activity in for next 36 months.

As is seen globally, manufacturing PMI continues to out-perform its services counterpart, courtesy of the latter being hit harder by Covid-19.

The coming times can see risk tilting towards the upside due to possible faster recoveries in population mobility and household spending. Agencies revising their growth estimates for India in short-term bodes well for country’s macro indicators.

The key risks will continue to be unforeseen events resulting from the virus, and current steep rates of inflation.

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