A man wearing a protective mask walks past a dog sitting on a sack of garlic in a closed wholesale market after authorities announced the closure for one day this week in the state of West Bengal, amid the spread of coronavirus disease (COVID-19), in Kolkata. (Reuters)
For the first time since March, production expanded in the Indian manufacturing sector in August with customer demand improving as customer businesses reopened, after closure restrictions eased amid the Covid-19 pandemic.
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- Last update: September 1, 2020 1:50 PM IST
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After alarming GDP figures on Monday, India’s Manufacturing Purchasing Managers Index (PMI) for August recorded 52, compared with 46 in July, signaling growth and a rebound in production volumes for the first time. once in five months.
For the first time since March, production expanded in the Indian manufacturing sector in August. The production growth was largely driven by higher customer demand for Indian products following the resumption of business operations, according to the companies.
“The rebound was led by an improvement in customer demand as customer businesses reopened, after closure restrictions eased amid the COVID-19 pandemic,” said IHS Markit. He added that production and new orders expanded at the fastest pace since February, hitting a 21-month high.
The decline in foreign exports slightly affected new orders in general, as companies mentioned conditions of moderate demand from abroad. “That being said, new business received by Indian manufacturers expanded at the fastest rate since February,” he adds.
However, it notes that, despite the moderation since July, job losses continue in August at a strong pace, extending the current sequence of decline to five months. The rate of contraction in the labor force eased from that observed in July, but remained generally strong.
Higher production levels supported a modest increase in the number of purchases during August, but companies told Markit that limited availability of goods, which initiated a further reduction in purchasing stocks, has extended the current depletion rate to five months.
Supply chains were disrupted for the sixth month in a row, with companies citing shipping restrictions, supplier delays and capacity pressures as the main drivers of increased lead times.
Reports of higher raw material costs due to supplier shortages and transportation delays stemming from the COVID-19 pandemic, resulted in higher input prices during August.
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Cost burdens increased for the first time since March, with the input price inflation rate at its highest since November 2018. Despite rising cost burdens, Indian manufacturers reported entry fees of lower factory due to competitive pressures and efforts to boost sales.
However, the rate of decline decreased to only a fraction that was the weakest in the current sequence of decline.
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