OPEN APP
Home / Economy / Manufacturing activity cools as demand slows

Manufacturing activity cools as demand slows

The scheme will incentivize manufacturiThe overall rate of expansion was modest, IHS Markit said, adding that new orders also rose for the second straight month, but at a softer pace. (REUTERS)Premium
The scheme will incentivize manufacturiThe overall rate of expansion was modest, IHS Markit said, adding that new orders also rose for the second straight month, but at a softer pace. (REUTERS)

  • IHS Markit's India Manufacturing Purchasing Managers’ Index or PMI stood at 52.3 in August, pointing to an improvement in overall operating conditions for the second straight month after the contraction seen in June

Manufacturing activity expanded for the second straight month in August, but the pace of growth remained muted as demand showed signs of weakness due to the pandemic’s impact, a survey showed.

Data released by analytics firm IHS Markit showed the purchasing managers’ index (PMI) for the manufacturing sector declined to 52.3 in August from 55.3 a month earlier but stayed above the 50-level, separating expansion in activity from contraction. PMI is compiled on the basis of responses from purchasing managers of around 400 manufacturers.

IHS Markit said that despite the expansion, the headline figure indicated a softer rate of growth. Growth was curbed by the pandemic and elevated price pressures, it said.

Some companies suggested that favourable market conditions and fruitful advertising boosted demand for their goods, the statement said. Others noted that sales fell due to the pandemic. August data pointed to back-to-back increases in new export orders, but here too, growth lost momentum, the statement said. Indian manufacturers also signalled a rise in cost burden.

Pollyanna De Lima, economics associate director at IHS Markit, said August saw a continuation of the Indian manufacturing sector recovery, but growth lost momentum as demand showed some signs of weakness due to the pandemic. “Yet, factory orders and output rose across the consumer, intermediate and investment goods categories," said Lima.

“The 12-month outlook for production remained positive, though confidence faded amid worries concerning the lasting scars of the pandemic and the adverse impact of rising costs on companies’ finances parallel to a lack of pricing power. Input prices increased sharply due to strong competition for scarce raw materials and transportation issues," Lima said.

Uncertainty regarding growth prospects, spare capacity and efforts to keep a lid on expenses led to a hiring freeze in August, following the first upturn in employment for 16 months in July, the statement said.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Close

Recommended For You

×
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout