India: Private sector PMI dips in December
January 6, 2021
The composite Purchasing Managers’ Index (PMI) produced by IHS Markit fell from 56.3 in November to 54.9 in December. Nevertheless, the PMI remained above the 50-threshold indicating an increase in business activity from the previous month.
The services PMI ticked down to 52.3 in December, from 53.7 in November, and missed analysts’ expectations of a 54.0 reading. Firming demand conditions continued to underpin new orders and output growth but the pace of the expansion softened in December. Moreover, employment levels and business sentiment fell in December. On the price front, input prices rose notably, while firms charged less for their services to spur demand amid stiff competition in December.
On the manufacturing side, the PMI increased marginally to 56.4 in December from 56.3 in November. The ongoing recovery in demand—particularly from abroad—kept new orders and production growth afloat albeit it was the softest pace in four months. Moreover, employment levels decreased at a softer pace in December, while business sentiment remained upbeat. On the price front, both input and output prices increased in response to higher raw material costs in December.
Commenting on the latest PMI data, Pollyanna De Lima, economics associate director at IHS Markit, said:
"It is clear that the early part of 2021 will continue to be challenging, but we're looking at a sustainable recovery and some return to normality once COVID-19 vaccines become available."
Author: Steven Burke, Economist