A worker welds a cooling coil plate inside an industrial manufacturing unit on the outskirts of Ahmedabad
Credit: Reuters Photo
New Delhi: After three consecutive months of deceleration, India's manufacturing sector growth revived in October helped by strong demand and international sales, an industry survey conducted by S&P Global showed on Monday.
Purchasing Managers’ Index (PMI) for manufacturing rose to 57.5 in October from an eight months low of 56.5 recorded in September. A PMI print above 50 indicates growth in the sector while below 50 shows contraction.
“The upturn in performance was boosted by stronger demand for Indian goods,” S&P Global said in the monthly survey report.
Companies that participated in the survey noted a quicker increase in order book volumes that was stronger than the average seen in nearly 20 years of data collection. “Anecdotal evidence suggested that the introduction of new products and successful marketing initiatives helped enhance sales performances,” the report said.
New export orders also exhibited stronger growth, following the weakest uptick in a year-and-a-half during September. Companies reported gains in new contracts from Asia, Europe, Latin America and the US.
“India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve. Rapidly expanding new orders and international sales reflect strong demand growth for India’s manufacturing sector,” said Pranjul Bhandari, Chief India Economist at HSBC.
To start the third fiscal quarter, business confidence is also very high due to expectations of continued strong consumer demand, new product releases, and sales pending approval, Bhandari added.
Meanwhile, there was an increase in inflationary pressure across manufacturing sectors. Input price inflation rose to a three-month high. Output prices increased sharply outpacing the series trend. “Input and output prices are both increasing as a result of persistent inflationary pressures in materials, labour, and transportation costs,” said Bhandari.
There was also good news on the job front. Around one-in-ten manufacturers that participated in the survey reported an increase in employment during the month while 1% shed jobs. “Not only did manufacturers hire extra staff at the start of the third fiscal quarter, but also to a greater degree than in September,” S&P Global said.
Improvements in demand and expectations of further growth in the year ahead spurred growth of purchase of input materials by manufacturers. Meanwhile, input delivery times shortened for the eighth consecutive month in October, albeit only slightly as the vast majority of panellists reported no change in vendor performance.