India Manufacturing PMI Expands in September on Strong Demand Conditions

NEW DELHI: India’s manufacturing activity expanded for the third straight month in September, but rising fuel, raw material and transportation prices pushed the overall rate of input cost inflation to a five-month high, market information provider IHS Markit said on Friday.

Rising to 53.7 in September from 52.3 in August, the seasonally adjusted Manufacturing Purchasing Managers’ Index or PMI highlighted a stronger expansion in overall business conditions across the sector, IHS Markit India said in a statement.

A reading above 50 indicates expansion and a figure below 50 points to contraction. PMI is compiled based on responses from purchasing managers of around 400 manufacturers.

The recovery in manufacturing sector continued in September as companies benefited from improving demand conditions amid the easing of pandemic-induced restrictions. With sales rising at a stronger rate, firms scaled up production and purchased additional inputs, the statement said.

There was also a faster upturn in international sales and an improvement in business confidence. Price pressures, which receded in each of the prior two months, intensified in September due to lingering shortages of raw materials as well as higher fuel and transportation costs, IHS Markit said.

For the September quarter, PMI averaged 53.8, a sizeable improvement from 51.5 in the June quarter, the statement said, adding that consumer goods was the brightest spot in September amid substantial growth in new orders and output.

“Indian manufacturers lifted production to a greater extent in September as they geared up for improvements in demand and replenishment of stocks. There was a substantial pick-up in intakes of new work, with some contribution from international markets,” said the statement, quoting Pollyanna De Lima, economics associate director at IHS Markit.

“After subsiding in each of the previous two months, cost inflationary pressures intensified in September,” Lima said. Only a small proportion of this additional cost burden was passed on to clients as seen by a slower and only modest increase in factory gate charges,” the statement said quoting Lima.

IHS Markit said anecdotal evidence indicated that demand conditions improved in part due to looser covid-19 restrictions.

Source: The Mint