India's manufacturing output showed the strongest growth in 13 years in October amid robust sales growth, IHS Markit India purchasing managers’ index showed, indicating economic recovery was gaining ground after the lifting of lockdown restrictions.
Rising to 58.9 in October from 56.8 in September, the headline seasonally adjusted PMI pointed to the strongest improvement in the health of the sector in over a decade, the information provider said in a statement on Monday. A reading above 50 shows expansion from the previous month.
The index is compiled from responses in the second half of the month from around 400 manufacturers, which indicates the direction of change compared to the previous month.
The IHS Markit India statement said growth was led by the intermediate goods category, but there were also robust expansions in the consumer and investment goods sub-sectors.
Manufacturers indicated that the ongoing relaxation of Covid-19 restrictions, better market conditions and improved demand helped them secure new work in October. Also, the upturn in sales was the strongest since mid-2008. New export orders too rose at a quicker pace, one that was the most pronounced in close to six years, said the company.
Greater production needs led to another monthly increase in input buying among Indian manufacturers. Moreover, quantities of purchases rose at the quickest pace in just under nine years. Inflationary pressures, meanwhile, remained subdued as seen by a modest increase in input costs and only marginal rise in selling prices, the statement said.
The data conforms to a strong jump in e-way bills for October indicating that more goods were shipped within and across states in the month. Generation of e-way bills (electronic permits for goods movement) in October was 21% higher than what was generated in October 2019 and 11% higher than what was generated in September this year. This early indicator suggests increased economic activity in October, Mint reported on Monday.
India’s industrial output for the month of August too had shown a trend of economic recovery. Factory output had contracted at a slower 8% in August compared to a 10.8% contraction July.
“Levels of new orders and output at Indian manufacturers continued to recover from the Covid-19 induced contractions seen earlier in the year, with the PMI results for October highlighting historically-sharp monthly rates of expansion," the statement said quoting Pollyanna De Lima, economics associate director at IHS Markit. Companies were convinced that the resurgence in sales will be sustained in coming months, as indicated by a strong upturn in input buying amid restocking efforts, said Lima.
News Source: Livemint