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India manufacturing PMI hits 8-month high in October

Manufacturing sector growth in India continued to gather momentum, with October data showing notably quicker expansions in new orders, production and input purchasing. (Photo: Mint)Premium
Manufacturing sector growth in India continued to gather momentum, with October data showing notably quicker expansions in new orders, production and input purchasing. (Photo: Mint)

  • While strong growth of both sales and production were noted in each of the three broad areas of the manufacturing sector, it was in intermediate goods that the sharpest rates of expansion were recorded

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NEW DELHI: India's manufacturing activity gained momentum in October, hitting an eight-month high, as companies scaled up production in anticipation of improvement in demand, a private survey showed.

Data released by the IHS Markit showed Purchasing Managers’ Index (PMI) rose to 55.9 in October expanding for the fourth consecutive month even as it stayed below the February reading of 57.5. 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. Rising from 53.7 in September, the latest data print is indicative of strongest improvement in overall operating conditions since February. 

The data analytics firm said, amid reports of improved market confidence, rising requirements among clients and successful marketing, new orders continued to expand in October. “While strong growth of both sales and production were noted in each of the three broad areas of the manufacturing sector, it was in intermediate goods that the sharpest rates of expansion were recorded," it added.

In addition to reporting a substantial increase in total new orders, Indian companies observed a notable pick-up in international demand for their goods. “New export work rose at a solid pace that was the quickest in three months," it added.

Pollyanna De Lima, economics associate director at IHS Markit, said manufacturing sector growth in India continued to gather momentum, with October data showing notably quicker expansions in new orders, production and input purchasing. "With companies gearing up for further improvements in demand by building up their stocks, it looks like manufacturing activity will continue to expand throughout the third quarter of fiscal year 2021-22 should the pandemic remain under control. Upbeat business confidence and projects in the pipeline should also support production in the coming months," she added.

However, De Lima said rising input cost inflation which accelerated substantially in October to a near eight-year high is a matter of concern. “Strong global demand for scarce raw materials continued to push up prices for these items. Some manufacturers hiked their fees in response, but for now the overall rate of charge inflation was moderate. Despite the overall improvement in operating conditions, jobs failed to increase. This was often linked to sufficient capacity to deal with current workloads and government norms surrounding shift work."

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