While the new export orders rose at a nearly six-year high pace, the upturn in sales was the strongest since mid-2008.
The manufacturing PMI rose to 58.9 in October, from 56.8 in September. (Bloomberg image)
The manufacturing sector in India has shown a strong rebound in the month of October, with the output surging to a 13-year high, and sales rising to the highest in nearly 12 years. Consequently, the manufacturing PMI rose to 58.9 in October, from 56.8 in September, according to the IHS Markit report. This is the strongest improvement in over a decade, which was led by the intermediate goods category, though there were also robust expansions in the consumer and investment goods sub-sectors, the report added. The relaxation in Covid-19 restrictions, improved market conditions, and the rise in demand are mainly believed to have supported new work in October.
While the new export orders rose at a nearly six-year high pace, the upturn in sales was the strongest since mid-2008.In response to strong sales gains and softer containment measures, firms lifted production at the strongest pace recorded since late-2007. While the production and sales are on a rise, the outlook is also brighter now. Hopes of an end to Covi-19 cases and the reopening of other sectors in the economy underpinned positive sentiment towards the year-ahead outlook for production. The level of confidence was at a 50-month high.
“Companies were convinced that the resurgence in sales will be sustained in the coming months, as indicated by a strong upturn in input buying amid restocking efforts,” said Pollyanna De Lima, Economics Associate Director at IHS Markit. However, there was disappointing news on the employment front though, with October seeing another reduction in payroll numbers, Pollyanna De Lima added.
While firms purchased additional inputs for use in the production process, payroll numbers were lowered due to government guidelines related to the coronavirus pandemic. The employment fell for the seventh consecutive month, however, it was the weakest in this sequence. Meanwhile, although input costs increased at a quicker pace than in September, the overall rate of inflation was modest by historical standards.