India Manufacturing Growth Unexpectedly Slows

India's manufacturing expansion unexpectedly slowed, but slightly, in December, survey results from IHS Markit showed on Monday.

The headline IHS Markit manufacturing Purchasing Managers' Index, or PMI, rose to 56.4 in December from 56.3 in November. Any reading above 50.0 indicates expansion in the sector.

Economists had expected the score to improve to 56.6.

Factory orders increased in December as the Covid-19 restrictions eased. At the same time, demand strengthened and market conditions improved, leading to rising production.

New export orders rose, but at the slowest pace in the current-four month sequence of expansion, and additional input purchases were made in December.

Stocks of purchases rose at the quickest pace since March 2011, while stocks of finished goods declined. Employment fell in December.

Input cost inflation rose to the highest in twenty-six months in December and output charges increased with rising cost burden. The rate of inflation was marginal.

The degree of optimism weakened to the lowest in four moths, as some firms were concerned about the effect of Covid-19 pandemic on the global economy.

"But, when we combine the latest three months we see that the performance of the manufacturing industry for the third quarter of fiscal year 2020/21 was notably better than in the second quarter," Pollyanna De Lima, economics associate director at IHS Markit, said.

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