India’s manufacturing Purchasing Managers Index (PMI) ended its downtrend and increased to 52.0 in August from 46.0 in July indicating recovery, stated HIS Markit on September 1. This was driven by an uptick in domestic demand as businesses resumed after the lockdown restrictions were eased.
Outlook
Indian manufacturers remain optimistic for the next 12 months pinning hope on improved demand and new business gains, said the report.
Challenges
The manufacturers witnessed a decline in foreign exports leading to sluggish demand in overseas market. Job cuts, however, continued in August, but contraction in workforce numbers has softened as against July.
The production levels in August rose to sustain a modest rise in purchases. However, the firms faced paucity which reduced their stocks of purchases extending the current rate of depletion to five months.
Additionally, the supply chains were disrupted for the sixth consecutive month due to COVID-19 related restrictions which elongated the delivery times. This led to rise in input costs during August and remains the highest since November 2018. Amid greater competitive pressure, manufacturers are forced to reduce their selling prices to stimulate sales and input cost inflation surged.