Business

PMI above 50 per cent of manufacturing sector for the fifth consecutive month, a sign of economic recovery

The country’s manufacturing activity registered a sharp trend in December due to strong production and input purchases by producers. It was published in a monthly survey published on Monday. After trading closed for several months last year, manufacturers are now trying to regain their reserves. This is why they are accelerating production and input collection.

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PMI above 50 for the fifth month in a row

IHS Markets on Monday released the India Manufacturing Procurement Management Index (PMI). It stood at 56.4 for December 2020, slightly above 56.3 in 2020. This is the fifth month in a row when the production polyme is above 50. If the PMI is above 50, it indicates a stimulus to activity. A PMI below 50 indicates contraction.

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Signs of improvement in the economy

Paoliana de Lima, Assistant Director, Economics, IHS Markets, said, “The recent PMI in the Indian manufacturing sector shows that the economy is improving. The demand-driven environment and the companies’ efforts to recreate safe stocks have further accelerated production. The entire manufacturing sector has shown improvement in business conditions.

Internationally, the demand for Indian products has increased

He said, ‘The three sub-sectors that have been considered have detailed records in both sales and production parameters. It is important to emphasize the macro nature of regeneration. ‘International demand for Indian products increased in December. However, growth has been adversely affected by Covid-19. As a result, export orders grew at the slowest pace in December, the most recent four-month expansion. Production growth has remained strong, but has come down to a four-month low.

Inflation is at a 26-month high

In terms of employment, it weakened again in December. As a result, employment declined for the ninth consecutive month. The survey said, “Companies said that the government’s guidelines for shift work and difficulty in finding suitable workers were the main reasons for the loss in terms of employment. Expenditure inflation has reached a two-month high.

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The three-month average PMI reached 57.2

The surveyed teams believe that prices of chemicals, metals, plastics and clothing have risen. Output prices have also risen due to rising input costs. However, the increase in output value has been moderate. Lima said that when we combine the statistics of the last three months, we see that the performance of the manufacturing sector in the third quarter was better than in the second quarter. The three-month average PMI has risen from 51.6 to 57.2.

He said the idea of ​​Indian manufacturers to increase output in the coming years remains intact. However, this optimism is at a four-month low as some organizations are concerned about the long-term impact of the Kovid-19 epidemic on the world economy.

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