India’s Manufacturing PMI Returns To Expansion Zone In July

A gauge of activity across India’s manufacturing sector expanded after a month as local lockdowns imposed to curb the deadlier second wave of the Covid-19 pandemic eased.

The IHS Markit India Manufacturing Purchasing Managers’ Index stood at 55.3 in July compared with 48.1 in June, according to a media statement. That’s the fastest pace of growth in three months. A reading above 50 indicates economic expansion.

Employment, too, increased in July — the first time since the onset of the pandemic.

Factory orders rose amid reports of improved demand and easing of local Covid-19 restrictions, the statement said.

New export orders expanded in July, after a moderate contraction in June. Rising sales supported a recovery in output after falling for the first time in 11 months in June.

The rate of production growth was sharp and outpaced its long-run average. With sales growth and rising production requirements, manufacturers hired extra workers in July, the release said. Though the increase in employment was mild, it ended a 15-month sequence of job shedding.

Producers saw an increase in their stocks of purchases during July. The accumulation was marked and followed a decline in June. Once again, raw material was reported to be in scarcity, causing longer delivery times among suppliers.

With demand for inputs outstripping supply, there was another substantial increase in purchasing prices. The rate of cost inflation remained above its long-run average, but eased to a seven-month low. Output charges rose slightly as several companies absorbed additional cost burdens amid efforts to boost sales.

Indian firms foresee output growth in the year ahead. The overall level of positive sentiment rose from 11-month low in June, but remained historically subdued as some companies were concerned about the path of the pandemic.