New Delhi, Jan 3 : Even as India’s manufacturing sector activities lost momentum in December the health of the industry improved during the period and manufacturers ended 2021 with strong gains in new business, a private survey said on Monday.

India’s Manufacturing Purchasing Managers’ Index (PMI) for the month of December slipped to 55.5 as compared to 57.6 in the previous month, showed data released by IHS Markit.

“At 55.5 in December, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) pointed to a robust improvement in overall operating conditions that was elevated by historical standards.

“This was despite the headline figure slipping from November’s 10-month high of 57.6,” the survey said.

A reading above 50 refers to expansion while the print below 50 means contraction in manufacturing activities.

The survey noted that Indian companies continued with their stock-building initiatives. Further, it said that business confidence strengthened but sentiment was again dampened by concerns surrounding supply-chain disruptions, Covid 19 and inflationary pressures.

The note on latest PMI score said that Indian manufacturers reported another monthly increase in overall cost burdens. The rate of inflation eased to a three-month low but remained sharp and above its long-run average.

Companies reported higher prices paid for a wide range of items, including chemicals, foodstuff, electronic components, metals and textiles.

“Output charges rose as some companies transferred higher cost burdens through to clients, but the overall rate of inflation was only slight and the weakest since October 2020.

“Concerns over elevated price pressures hampered business confidence in December, with firms also worried that the pandemic and supply-chain issues could dampen the recovery next year. The overall degree of optimism remained below its long-run average, despite improving from November’s 17-month low,” said IHS Markit.

During the month of December, spending trends were mixed, with employment falling fractionally in response to a lack of pressure on capacity, but firms purchasing additional inputs amid restocking efforts.

The survey said that buying levels increased substantially in the latest month. Input inventories expanded as a result, while holdings of finished goods continued to decline as companies fulfilled rising sales from existing stocks.

“As for supply chains, manufacturers again reported longer lead times on inputs. In fact, vendor performance worsened to the greatest extent since August 2020. Delays were commonly associated with raw material scarcity among distributors,” it said.

International demand for Indian goods continued to improve in December. New export orders rose for the sixth month in succession, albeit only slightly, it stated.(UNI)