Manufacturing activity rose to a ten-month high in November

MUMBAI: The survey report on manufacturing activity for the month of November, the second day after the release of Gross Domestic Product (GDP) data for the September quarter of the current financial year, has also been encouraging.

The manufacturing sector's IHS Market Purchasing Managers' Index (PMI), which stood at 6.50 in October, rose to 6.30 in November. This is the highest PMI since January this year, the survey report said. Thus, the November PMI has been at a ten-month high.

A PMI above 50 is considered an extension of that area. Large companies began hiring in November after cutting jobs for three consecutive months. However, the pace of job creation is still slow.

The picture for the manufacturing sector in November is rosy, but given the spread of omicron and inflationary conditions, the situation could worsen going forward.

November has seen a second surge in employment in the last twenty months. Overall production costs have gone up due to the gap between supply and demand and rising transport costs. Export orders have also seen slower growth.

As in October, raw material prices rose to a three-month high in November. The report notes that companies are passing on the burden of rising raw material costs to consumers.

Producers are optimistic about the future of growth, but the overall level of positive sentiment has remained at a 13-month low. Companies are worried that inflationary pressures could dampen demand and further soften production.

In addition to the new variant of the Corona, inflationary pressures pose a major risk to the outlook, said an economist at IHS Markets. The report also noted that manufacturers were forced to purchase additional raw materials in November due to restocking and production requirements.