India’s manufacturing activity grew at its fastest pace in more than eight years in September as an easing of coronavirus lockdown restrictions fueled increased demand and production, however, a private investigation showed layoffs continued.
- Signs of recovery are good news for Asia’s third-largest economy, which is expected to mark its first annual contraction since 1979 this year. The pandemic is spreading in India at the fastest rate in the world.
- The Nikkei Manufacturing Purchasing Managers Index, compiled by IHS Markit, rose to 56.8 in September from 52.0 in August, above the 50 level that separates growth from contraction for the second month in a row. It was the highest reading since January 2012.
- “India’s manufacturing industry has continued to move in the right direction, with September PMI data highlighting many bright spots.
- Due to the easing of COVID-19 restrictions, factories have been moving at full speed, supported by increasing revenues and jobs, ”said Pollyanna De Lima, IHS Markit Associate Director of Economics.
- While uncertainty remains about the COVID-19 pandemic, growers can at least for now benefit from the recovery.
- Tracking the production of a sub-index reached its highest level since December 2007 and new orders grew at the fastest pace since February 2012, helped by domestic and external demand, which increased for the first time in September month.
- Although input prices rose at a slower pace in September, manufacturers raised their selling prices after cutting them since March to secure sales.
- Despite the strong rebound, companies downsized for the sixth month in a row. Distortions linked to the coronavirus have already put millions of people out of work.
- The sector is unlikely to get much support from the Reserve Bank of India in the coming months, as still high inflation should force the RBI to stay on the sidelines.
- Earlier this week, the RBI postponed a scheduled policy committee meeting from September 29 to October 29. 1 and said it would be reprogrammed. She did not give a reason for the move.
- Still, business optimism for the next 12 months has reached its highest level since August 2016.
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