Manufacturing activity hits 28-month low in Dec

Highlights

India\'s manufacturing activity contracted in December for the first time in over two years with Nikkei\'s Manufacturing Purchasing Managers\' Index (PMI) falling to a 28-month low of 49.1 against 50.3 in November.

New Delhi : India's manufacturing activity contracted in December for the first time in over two years with Nikkei's Manufacturing Purchasing Managers' Index (PMI) falling to a 28-month low of 49.1 against 50.3 in November.

  • Markit-compiled Nikkei PMI falls to 49.1 last month, indicating contraction

A Markit-compiled Nikkei PMI reading below 50 indicates contraction, and this was the first time since October 2013 that it fell below the 50 threshold. "India's manufacturing sector took a turn for the worse at the year-end, with already gloomy internal demand further hampered by floods in the south of the country," Markit economist Pollyanna De Lima said in the report released on Monday.

"Ending a 25-month sequence of growth, production plummeted in December. Such was the extent of the decline that the rate of reduction was the sharpest since financial crisis," she added. The contraction in December is the worst since the financial crisis of 2008. Flow of new work orders contracted for the first time since October 2013.

The survey said December's unprecedented rainfall in Chennai impacted heavily on the sector, with fall in new work leading the companies to scale down output at the sharpest pace since February 2009. Inflation was at a seven-month high in both input costs and output charges, the report said. "The continued depreciation of the rupee against the US dollar pushed inflation higher, with PMI price indicators pointing to stronger increases in both input prices and output charges," De Lima said.

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