India's manufacturing growth accelerated last month after a recent blip, supported by robust demand, according to a private survey that also showed input costs rose at the slowest pace in 40 months.
The findings were positive for Asia's third-largest economy, which grew a surprisingly strong 7.6% last quarter, slightly slower than the 7.8% growth seen in the April-June quarter but remaining on track to be the fastest growing major economy this fiscal year.
The Manufacturing Purchasing Managers' Index, compiled by S&P Global rose to 56.0 last month from 55.5 in October. That marked nearly two and a half years of the index being above the 50-mark separating expansion from contraction.
"India's manufacturing economy is clearly in good shape as 2023 draws to a close, with expectations for a continued strong performance in 2024," noted Pollyanna De Lima, economics associate director at S&P Global.
Output and new orders - a key gauge for demand - expanded at a faster clip in November after moderating in the previous month, while job creation rose for an eighth consecutive month.
Business confidence for the coming 12 months remained strong, with the future output sub-index at 62.2. However, that was a seven-month low due to rising inflation expectations, the note said.
While domestic demand appeared strong, international demand took a hit, with new export orders at a five-month low.
Even though input costs grew at the slowest pace since July 2020, not all the benefits were passed on to customers as the rate of output price inflation only eased to a seven-month low.
"Prices for raw materials and components still rose in November, but improved availability at suppliers amid subdued global demand for inputs led to a considerable retreat in cost pressures," added De lima.
"Some concerns over prices increasing in the near-term were reflected in the data for business sentiment."
Retail inflation in India eased to a four-month low in October, but remained above the Reserve Bank of India's 4% medium term target.
Last month, RBI Governor Shaktikanta Das said India was vulnerable to "recurring and overlapping" food price shocks and the central bank would remain watchful to progressively align inflation to the target, while supporting growth.
(Reporting by Anant Chandak; Editing by Kim Coghill)