Buzzing factories
PremiumThe buoyancy in manufacturing points to a healthy pipeline of orders and optimism within the sector
Last year ended on a positive note for India’s manufacturing sector, with the purchasing managers’ index posting an impressive figure of 55.5 in December. Though down from November’s 57.6, it’s still well above the 50 mark that separates expansion from contraction and has averaged 56.3 in the latest quarter.
The buoyancy points to a healthy pipeline of orders and optimism within the sector, which should bode well for our economic prospects as we seek to consolidate a recovery from the covid crisis. Inflation has been a threat, although it does not appear to have done much damage thus far. Input cost increases have begun being passed on to consumers, and the impact on demand so far hasn’t been sharp. This could make space for a gradual reversal of India’s easy-money policy to go with post-pandemic monetary normalization in advanced economies like the US. While a third covid wave that’s on the rise has upped our level of uncertainty, there’s little so far to suggest we need stringent clamps on commercial activity to get through it. Unless risks shoot up, factories can surely be allowed to keep buzzing with safety protocols in place.
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