India’s manufacturing strengthens further in October with strong recovery in new orders and production

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Activities in India’s manufacturing sector strengthened further in October, as companies increased output and stepped up input purchases in anticipation of further improving demand, a monthly survey reported on Monday. Strong gains in new jobs helped output growth in October, with output and new orders growing at the fastest pace in seven months, while business optimism peaked in six months, according to investigation.

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers (PMI) index fell from 53.7 in September to 55.9 in October, indicating the biggest improvement in overall operating conditions since February. October PMI data indicated an improvement in overall operating conditions for the fourth consecutive month. In PMI parlance, an impression above 50 means expansion while a score below 50 indicates contraction.

“The growth of the manufacturing sector in India has continued to accelerate, with October data showing a significantly faster expansion in new orders, production and input purchases,” said Pollyanna De Lima, associate director of economics at IHS Markit. The pick-up in new work orders was strong and the fastest in seven months and factory output grew at a rapid pace, the strongest since March, according to the survey.

“With companies bracing for further improvements in demand by building up their inventories, it looks like manufacturing activity will continue to expand through the third quarter of fiscal 2021/22 if the pandemic remains under control.” , said Lima. Indian companies have also seen a noticeable recovery in international demand for their products. New export jobs have progressed at a steady pace, the fastest in three months.

Positive business confidence and ongoing projects should also support production in the coming months, Lima noted. On the price side, the overall inflation rate for input costs hit a 92-month high. Anecdotal evidence has pointed to higher costs for chemicals, fabrics, metals, electronics, oil, plastics, and transportation.

“Worryingly, input cost inflation accelerated dramatically in October to an almost eight-year high as strong global demand for scarce commodities continued to push up prices for these items. Some manufacturers have increased their fees in response, but for now the overall rate of charge inflation was moderate, ”Lima said. Going forward, companies intend to develop new products, invest in marketing, and focus on customer relations to support growth in the coming year. “The overall degree of optimism has strengthened to reach a peak in six months,” notes the survey.

However, despite the overall improvement in operating conditions, employment has not increased. “This was often related to sufficient capacity to cope with current workloads and government standards regarding shift work,” Lima said.


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