India's factory activity picks up speed, hiring at 33-month high
1 min read . Updated: 01 Nov 2022, 11:13 AM IST
PremiumThe Manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 55.3 in October from September's 55.1
India's factory activity expanded at a stronger pace in October, encouraging firms to hire workers at the fastest pace in nearly three years, according to a private survey released today. The Manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 55.3 in October from September's 55.1. The reading was better than a Reuters poll estimates of 54.9. It is also the sixteenth month that India's factory activity reading has remained above the 50-level , which separates growth from contraction.
“The Indian manufacturing industry again showed signs of resilience in October, with factory orders and production rising strongly," said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
Unlike some other economies, India has shown better resiliency to persistently-high inflation and a sinking currency against the US dollar since the start of this year. Indian stock market index Sensex inching closer to all-time highs, significantly outperforming the MSCI emerging market index.
“There were signs of substantial capacity pressures at Indian goods producers, as outstanding business volumes rose to the greatest extent in almost two years. Some firms responded to this by hiring extra workers," the survey said.
In terms of sectors, “consumer goods was the best-performing category in October, "recording the greatest performances for output, total sales and exports."
“Manufacturers continued to loosen the purse strings as they expect demand buoyancy to be sustained in coming months. There was a marked rise in input purchasing, with firms adding to their inventories to better align with client purchasing. Capacities were again expanded to accommodate for improving sales. The Future Output Index component indicated robust business optimism towards the year-ahead outlook for output," said Pollyanna De Lima of S&P Global Market Intelligence.
Although overall demand and output expanded at a slower pace last month, growth was still solid, with foreign demand increasing at its strongest rate since May.
That led firms to increase headcount at the quickest rate since January 2020. Optimism around future output also remained above the long-term average.
While input price inflation remained around the previous month's level, prices charged increased at their slowest pace since February, meaning overall inflation, which rose to a five-month high in September, was likely to ease.
That could provide some breathing room for the Reserve Bank of India, which is widely expected to adopt a slower approach to rate rises than its major peers in coming months. (With Agency Inputs)
