The manufacturing sector is still being weighed down by the COVID-19 pandemic and firms continue to cut jobs for the eighth consecutive month. The Nikkei Manufacturing Purchasing Managers’ Index (PMI), compiled by IHS Markit, declined to 56.3 in November fro October’s more than a decade high of 58.9.
Pollyanna De Lima, economics associate director at IHS Markit, clearly said that a spike in COVID-19 cases and the possibility of associated restrictions could undermine the recovery. “Companies noted that the pandemic was the key factor weighing on growth during November, with COVID-19 related uncertainty also restricting business confidence,” Lima said.
The easing of COVID-19 restrictions, as per a statement by IHS, combined with an improvement in market conditions and a pick-up in demand, supported an increase in production. It pointed out that although the slowest for three months,the rate of expansion in output was sharp and outpaced its long-run average. And amid reports of strong demand and greater output requirements, Indian manufacturers bought additional inputs even as the quantity of purchases rose at the slowest pace in three months.
Moreover, the November data highlighted a quicker increase in input costs facing Indian manufacturers, with the overall rate of inflation the strongest in two years. As a result, companies adjusted their fees upwards, with the rate of charge inflation picking up to a nine-month high. According to IHS survey, output growth is still predicted for the year ahead, but concerns about public policies, rupee depreciation and the COVID-19 pandemic dampened overall confidence. As such, employment decreased again as companies observed social distancing guidelines. Lima said employment remained in contraction territory, however, with companies reportedly keeping the minimum possible number of workers as per government guidelines.
But India’s economy recovered faster than expected in the September quarter as the pick-up in the manufacturing sector helped GDP clock a lower contraction of 7.5 per cent.