India: Manufacturing Finishes 2022 On A Record High, PMI Surges To 57.8

India’s manufacturing sector registered its sharpest uptick in output in 13 months in December 2022, with new orders rising at the fastest pace since February, S&P Global India Manufacturing Purchasing Managers’ Index (PMI) showed.

The S&P Global India Manufacturing PMI surged to 57.8 in December 2022 from 55.7 in the prior month of November, pointing to the highest reading since October 2020 and marking the 18th straight month of expansion.

Output growth hit a 13-month high, new orders rose the most since February 2021, and buying levels grew at the strongest pace since May 2020

The S&P Global India Manufacturing Purchasing Managers’ Index measures the performance of the manufacturing sector and is derived from a survey of 500 manufacturing companies.

The Manufacturing Purchasing Managers Index is based on five individual indexes with the following weights: New Orders (30 percent), Output (25 percent), Employment (20 percent), Suppliers’ Delivery Times (15 percent) and Stock of Items Purchased (10 percent), with the Delivery Times index inverted so that it moves in a comparable direction. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change.

According to the PMI survey, demand resilience boosted sales growth in December,  with the rate of increase picking up to the quickest since February 2021.

“Following a promising start to 2022, the Indian manufacturing industry maintained a strong performance as time progressed, wrapping the year with the best expansion in production seen since November 2021. Demand strength took centre stage among the reasons provided by firms for improvements in many measures. Additional materials were purchased and extra workers hired as companies sought to supplement production and maintain healthy levels of inventories," said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

With overall demand strong and resilient, producers also enhanced input purchases at a ‘near-record’ pace that ‘was historically sharp and the strongest since May 2022’, S&P Global reckoned from industry responses for the survey-based index.