Manufacturing Rises For Third Straight Month, Quickest Pace In 13 Years: Survey

In October 2020, India’s manufacturing sector operation improved for the third straight month, with businesses growing production to the greatest extent in 13 years in the midst of robust sales growth. The IHS Markit India Manufacturing Purchasing Managers Index (PMI) increased from 56.8 in September to 58.9 in October, according to a monthly survey, and pointed to the greatest improvement in the health of the sector in over a decade.

In April 2020, after having seen growth for 32 consecutive months, the index slipped into contraction mode. A print above 50 signifies expansion in PMI parlance, while a score below that denotes contraction. Ms. Pollyanna De Lima, Economics Associate Director at IHS Markit, stated that Indian manufacturers’ levels of new orders and production continued to recover from the COVID-19 induced contractions seen earlier in the year, with October PMI results highlighting historically sharp monthly rates expansion.

She further noted that companies were persuaded that in the coming months the resurgence in sales would be maintained, as shown by a clear upturn in input purchasing in the midst of restocking efforts.

Manufacturers stated that in October, the easing of COVID-19 constraints, improving business conditions and improved demand helped them secure new jobs. On the job front, there was a further decrease in employment due to compliance with government guidelines relevant to the COVID-19 pandemic. The decrease was the seventh in successive months.

“However, there were troubling reports on the work front, with October seeing another drop in payroll numbers. Participants in the survey who noted job shedding reported having observed containment steps to avoid the spread of the 2019 coronavirus disease,” Ms. Lima said.

As was seen by a small rise in production costs and a mere marginal increase in selling prices, inflationary pressures remained subdued. In the meantime, expectations for an end to the COVID-19 cases and the reopening of other sectors in the economy have underpinned optimistic sentiment on the prospects for output ahead of the year.

Source: PIB