PremiumListen to this article |
NEW DELHI: India’s manufacturing activity grew at its fastest pace in 10 months in November, as companies scaled up input buying encouraged by strengthening demand and improving market conditions, which in turn led to the second-quickest accumulation in stocks of purchases since data collection started nearly 17 years ago, a private survey showed.
Data released by the IHS Markit showed Purchasing Managers’ Index (PMI) rose to 57.6 in November from 55.9 in October. A reading above 50 indicates expansion in economic activity and a number below that signals contraction.
The second devastating wave of coronavirus pandemic had hit the country in March, affecting manufacturing activity.
"Underlying data suggested that the domestic market was the main source of sales growth, as new export orders rose at a slight pace that was weaker than in October. Buoyed by the pick-up in demand, companies stepped up production volumes during November. Output rose sharply and at the fastest rate in nine months. Greater production requirements and restocking efforts encouraged manufacturers to purchase additional inputs in November. The rate of expansion was substantial and outpaced its long-run average by a substantial margin," the data analytics firm said.
Pollyanna De Lima, economics associate director, at IHS Markit said the fact that firms purchased additional inputs at a stronger rate amid efforts to restock, combined with recurring declines in inventories of finished goods and tentative signs of a pick-up in hiring activity, indicate that production volumes will likely expand further in the near term.
“The key threat to the outlook, in addition to potential new waves of COVID-19, is inflationary pressures. For now, companies are absorbing most of the additional cost burdens and lifting output charges only moderately. Should raw material scarcity and shipping issues continue to feed through to purchasing prices, substantial increases in output charges could be seen and demand resilience would be tested," she cautioned.
