India’s Manufacturing PMI rose to 58.9 in October from 56.8 in September boosted by robust sales as companies accelerated production at the fastest rate in the last 13 years.
IHS Markit’s India Manufacturing Purchasing Managers’ Index (PMI) continued to rise in October. Manufacturers increased purchases to keep up with the higher production. Inflation was under control amid a small increase in input costs and a slight rise in selling prices. The data indicates the strongest improvement in the manufacturing sector in over 10 years. The highest growth was seen in the intermediate goods category, followed by the consumer and investment goods sub-sectors.
Easing of COVID-19 restrictions, improved market demand helped manufacturers secure new orders in October. Rise in sales was the fastest since mid-2008. Export sales too rose at a rate stronger than the past six years. Strong sales drove production which in turn increased monthly quantities of raw material purchases by Indian manufacturers.
However, social distancing guidelines forced companies to reduce employment. The fall in employment was, however, slowest in the last seven months. Backlogs increased but at a slower pace than the last six months, supplier delivery times also rose marginally, indicating an easing of pressures on production. Finished good inventory declined amid robust sales.
In October, manufacturers’ Input cost increased at a faster pace than in September. A few producers raised prices, while a vast majority left their prices unchanged from the prior month.
Manufacturers are hopeful of an end of the COVID-19 pandemic and further easing of restriction in other sectors, which is likely to boost production in the year ahead. Business confidence rose to a 50-month high. Companies are confident that the rise in sales will hold up in the coming months as indicated by increased raw material buying and restocking.