For the first time since December 2015, manufacturing activity in India is contracting.
The index is based on a 100-pt scale with the 50-pt mark separating expansion from contraction.
Manufacturers faced a substantial increase in input costs in December, mainly linked to higher prices for steel, zinc and dairy products, forcing them to raise output prices for the first time in 70 months.
Data released by the China Federation of Logistics & Purchasing together with the National Bureau of Statistics on Sunday showed that China's official manufacturing PMI fell to 51.4 in December from 51.7 in November.
"Growth in key variables such as production volumes, new orders, employment and purchasing activity remained marked". "Having held its ground in November following the unexpected withdrawal of Rs 500 and Rs 1,000 bank notes from circulation, India's manufacturing industry slid into contraction at the end of 2016". The Index fell to 49.6 last month from 52.3 in November.
On a quarterly basis, manufacturing PMI had been rising steadily, from the first quarter's lower than 50 to the second and third quarters' slightly above 50, and to over 51 for the fourth quarter. Businesses also highlighted challenging conditions in the external markets, with a fall in new business orders from overseas that ended a six-month sequence of growth.
It quoted Bernard Aw, economist at IHS Markit that conducts the survey for Nikkei, Inc., as noting that "t$3 he Philippines continued to see strong improvements in manufacturing conditions during December, where robust client demand underpinned the PMI". Backlogs rose for the seventh consecutive month, but at the slowest rate in this sequence, the survey showed.