India's PMI manufacturing improved marginally to 54.9 in Feb-22 from 54.0 in Jan-22 supported by the relatively rapid moderation of the third Covid wave. An increase in new orders from domestic as well as international market led to an improvement in production activities in the manufacturing space which further nudged higher the pace of input buying in Feb-22.
Some signs of capacity pressures were seen in the manufacturing sector, with the backlogs rising marginally. On the price front, substantial rise in input costs due to spike in commodity prices has led manufacturers to raise output prices at a modest pace. While the degree of optimism remained below the long run average, business sentiment improved visibly underpinned by business expansion plans and a gradual normalization post the Omicron wave in Jan-22.
While Acuité believes that the growth outlook for India may not have a high linkage with the emerging geo-political risks, the increasing sanctions on Russia by many developed nations can disrupt the global commodity markets and global supply chain of some products, thereby having an indirect impact on the supply side and aggravating the inflationary pressures.
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