Manufacturing sector conditions in India continued to improve in October with companies raising output to the greatest extent in 13 years amid robust sales growth.
Rising from 56.8 in September to 58.9 in October, the IHS Markit India Manufacturing Purchasing Managers’ Index pointed to the strongest improvement in the health of the sector in over a decade. Growth was led by the intermediate goods category, but there were also robust expansions in the consumer and investment goods sub-sectors.
The 50-point mark separates expansion from contraction and the sector has staged a smart recovery after contracting for four successive months since April. The PMI survey is compiled by IHS Markit from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
A raft of recent data has pointed to a rebound in the economy, which has contracted by 23.9% in the June quarter. Experts say the pace of contraction is expected to narrow further in the months ahead. But they urge caution that the pace of recovery would depend on the trajectory of the coronavirus pandemic and the spread of infections. The government has allowed opening up of the economy in a phased manner in the past few months and activity has gathered momentum.
Hopes of an end to Covid-19 cases and the reopening of other sectors in the economy underpinned positive sentiment towards the year-ahead outlook for production. The level of confidence was at a 50-month high, the survey showed.
It said that, moreover, the upturn in sales was the strongest since mid-2008. New export orders likewise rose at a quicker pace, one that was the most pronounced in close to six years. In response to strong sales gains and softer containment measures related to the Covid-19 disease, firms lifted production at the strongest pace recorded since late-2007.