The manufacturing PMI increased from 52 in August to 56.8 in September, signalling back-to-back improvements in the health of the sector.
Manufacturing PMI in September 2020 reached its highest mark since January 2012, supported by accelerated increases in new orders and production. The manufacturing PMI increased from 52 in August to 56.8 in September, signalling back-to-back improvements in the health of the sector, said the IHS Markit report. While there were renewed expansions in export sales, input stocks, and business confidence, output prices, too, rose for the first time in six months. Indian manufacturers lifted the output for the second consecutive month, at the third quickest pace on record.
Due to loosened COVID-19 restrictions, factories went full steam ahead for production, supported by a surge in new work. “Exports bounced back, following six successive months of contraction, while inputs were purchased at a sharper rate and business confidence strengthened,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
However, despite the strong growth of orders, Indian goods producers signalled another reduction in payroll numbers. Employment has now decreased for six consecutive months. Employment lagged behind as some companies reported difficulties in hiring workers, while others suggested that staff numbers had been kept to a minimum amid efforts to observe social distancing guidelines, Pollyanna De Lima added.
Overall, the manufacturing PMI in the second quarter of the current fiscal year showed significant improvement over the first quarter. The manufacturing PMI was 35.1 in Q1, which shot up to 51.6 in Q2. Further, almost one-third of manufacturers expect output growth in the coming twelve months, against 8 per cent that foresee a contraction. The projections are of the strongest degree of overall optimism in over four years. Meanwhile, holdings of inputs increased for the first time in six months while inventories of finished goods decreased at a sharp and accelerated rate as companies utilised stocks.