Factory activity at its quickest pace in October post-COVID

Strong demand has seen India record factory activity at its quickest pace in eight months in October post-COVID. Demand has pushed increased output but there are concerns about surge in the cost of raw materials.

The Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, jumped to 55.9 in October from September’s 53.7 – the highest since February, remaining above the 50-level separating growth from contraction for a fourth straight month.

This marked the fourth straight month of expansion and the strongest growth since February, as both output and new orders expanded at the fastest rate in seven months, amid the easing of COVID-19 restrictions. New export orders increased at a solid pace that was the quickest in three months. Meanwhile, employment continued to decline, with the rate of job shedding was marginal.

According to Markit Economics, new export orders increased at a faster pace, though one that was modest overall. At the same time, employment little-changed, as many firms reported the compliance of government guidelines surrounding shift work. Prices data showed input cost inflation accelerated to a five-month high, due to a faster rise in fuel, raw material and transportation prices. Output prices, however, increased at a slower and only moderate rate. Business confidence also improved at a near-record rate, amid strong input buying growth.

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Pollyanna De Lima, economics associate director, IHS Markit, in a press release said that with companies gearing up for further improvements in demand by building up their stocks, manufacturing activity will continue to expand throughout the third quarter of fiscal year 2021-22 should the pandemic remain under control.

“Upbeat business confidence and projects in the pipeline should also support production in the coming months. Despite the overall improvement in operating conditions, jobs failed to increase. This was often linked to sufficient capacity to deal with current workloads and government norms surrounding shift work,” De Lima said.