Manufacturing activity in India gathered steam in October as companies augmented production and stepped up input purchasing in anticipation of further improvements in demand.
A gauge of activity across the country's manufacturing sector expanded for the fourth straight month. The IHS Markit India Manufacturing Purchasing Managers' Index stood at 55.9 in October against 53.7 in September and 52.3 in August.
Job Losses Continue
Meanwhile, manufacturing jobs continued to fall even after producers recorded the strongest improvement in overall operating conditions since February. Overall, new orders went up at the fastest pace in seven months, while factory output also went up at the fastest pace since March.
The PMI had hit a slowdown bump in its path towards growth back in July when the index had gone down below the critical 50.0 mark for the first time in nearly a year.
After starting 2021 on a stronger footing than it ended in 2020, the manufacturing sector has continued to see-saw between rising and suddenly losing growth momentum. The PMI, as a result, has been volatile throughout 2021. The recent rise also offers hope as output, new orders, exports, a number of purchases and input stocks all strengthened.
While strong growth in sales and production were noted in each of the three broad areas of the manufacturing sector, intermediate goods witnessed the sharpest expansion, reported Bloomberg.
Additionally, Indian companies observed a notable increase in international demand for their goods. New export work rose to the quickest in three months, according to the survey.
Furthermore, input purchases also went up at the fastest pace since April as producers geared up to cope with the surfeit of new orders. But the cost of inputs started to pinch, with the overall inflation for them surging to a 92-month high.
"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 the 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," Pollyanna De Lima, Economics Associate Director at IHS Markit and author of the report, said.