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 India's manufacturing industry continued to grow in December 2021, albeit at a slower pace sequentially.

The headline seasonally-adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) came in at 55.5 (index reading).

The PMI ranges between 0 and 100, with a reading of above 50 indicating an overall increase compared to the previous month.

In November 2021, the headline seasonally-adjusted index had risen to 57.6, and the latest quarterly reading was at 56.3.

The PMI report said that amid reports of strong demand conditions, fruitful marketing, and new client wins, manufacturers observed a further increase in new orders during December.

The upturn was sharp, despite being the slowest since September, the report said.

Similarly, production rose at a sharp pace, but was nevertheless the weakest in three months.

"The last PMI results of 2021 for the Indian manufacturing sector were encouraging, with the economic recovery continuing as firms were successful in securing new work from domestic and international sources. Higher sales underpinned a further upturn in production and companies carried on with their restocking efforts," said Pollyanna De Lima, Economics Associate Director at IHS Markit.

"Manufacturers were optimistic that output would continue to increase in 2022, but business sentiment was somewhat tamed by worries surrounding the path of the pandemic, inflationary pressures and lingering supply-chain disruptions."

According to De Lima, there were tentative signs that inflationary pressures started to subside, but companies were not particularly confident that such trend would continue.

"Despite easing in December, input cost inflation was still running at one of its highest rates in around seven-and-a-half years."

"The vast majority of firms nevertheless decided to keep their selling prices unchanged, in order to boost sales, with overall charges up only marginally in December."