In contrast, input inventories rose for the tenth successive month. The key factor enabling companies to rebuild their input stocks was another increase in quantities of purchases. The upturn matched the solid pace noted in November, to be the joint-quickest in 11 months. At the same time, suppliers' delivery times were broadly unchanged in December. Goods producers reported that higher prices for materials, especially steel, resulted in another increase in overall cost burdens. That said, the rate of inflation eased to a 34-month low. The rise was marginal and much softer than seen on average over the survey history.
Easing cost inflationary pressures translated into unchanged selling prices, thereby ending a 16-month sequence of charge inflation. Efforts to boost sales were also reported as a reason preventing firms from hiking their fees.
Looking ahead, companies predicted that marketing initiatives, capacity expansions and forecasts of further improvements in demand will boost output in the coming year. That said, the level of confidence moderated from mid-quarter and was subdued in the context of historical survey data.
Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Principal Economist at IHS Markit and author of the report, said: "The Indian Manufacturing PMI indicated that the sector ended 2018 on a high, with growth stronger than seen at the start of the year. Output continued to rise strongly, in line with a robust upswing in sales. Companies benefited from rising international demand for Indian goods, as export orders expanded for the fourteenth straight month. "It's particularly encouraging to see the quarterly PMI average climb to its highest mark since Q3 FY 2012, suggesting that the sector made a robust contribution to GDP.
"Spare capacity was evident, with vendors' delivery times unchanged and input cost inflation softening. These signs of easing inflationary pressures indicate that we're likely to see the RBI adopt an accommodative monetary policy stance in early 2019.
"Meanwhile, job creation weakened, with companies perhaps cautious about making hiring decisions ahead of next year's elections and a less upbeat optimism towards the outlook."
END
Sources: Nikkei, IHS Markit.
