Manufacturing sector activities moderate in August: PMI

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India Manufacturing Purchasing Managers’ Index in August suggests that the manufacturing sector activities moderated in the month with rising business orders and production. In August, the seasonally adjusted IHS Markit India Manufacturing PMI stood at 52.3, down from 55.3 in July. This demonstrated a lower rate of growth that was below its long-run average. The data also points to the fact that the overall operating conditions have shown improvement for the second straight month.

A print above 50 means expansion while a score below 50 denotes contraction in PMI parlance.

The economics associate director at IHS Markit, Pollyanna De Lima, said that the month of August witnessed a continuation in the recovery of the Indian manufacturing sector. However, due to the pandemic, the demand weakened and the growth also lost its momentum. Still, there has been a rise in the factory orders and output across the consumer, intermediate, and investment goods categories. The survey noted that the firms stopped the hiring activity as their sales witnessed a softer upturn. Covid-19 also affected the business confidence.

“Uncertainty regarding growth prospects, spare capacity and efforts to keep a lid on expenses led to a hiring freeze in August, following the first upturn in employment for 16 months in July,” Lima added.

There have been back-to-back increases in the new export orders the data pointed. However, the growth also lost its momentum and saw a marginal expansion. The current period of inflation has extended to 12 months as the manufacturers hinted at another monthly rise in cost burden.

The rate of increase softened but continued to remain higher by historical standards.

Lima said that there has been a rise in charges levied by manufacturers due to some companies sharing a part of their additional cost burdens with clients. Due to strong competition, the input prices increased sharply also owing to scarce raw materials and transportation issues.