According to a private survey, manufacturing activity in India picked up in October as companies ramped up production in response to a significant increase in new job intakes. Similarly, factory output increased at a rapid pace, the fastest since March.
The seasonally adjusted IHS Market India Manufacturing Purchasing Managers' Index was in expansion territory for the fourth month in a row in October, at 55.9 vs 53.7 in September, indicating the strongest improvement in overall operating conditions since February.
According to the survey, firms increased input purchases as part of stock-building efforts and in anticipation of further increases in demand, while business optimism reached a six-month high.
Companies, on the other hand, reported rising prices for a variety of materials and transportation, with overall input costs increasing at the fastest rate since February 2014, according to the survey. As a result, the selling charges were reinstated.
In addition to reporting a significant increase in total new orders, Indian firms reported a noticeable increase in international demand for their goods. According to the survey, new export work increased at a steady pace, the fastest in three months.
Pollyanna De Lima, Economics Associate Director at IHS Market commented, “with companies stockpiling for further increases in demand, it appears that manufacturing activity will continue to expand throughout the third quarter of fiscal year 2021/22 if the pandemic is kept under control. Positive business confidence and projects in the pipeline should also help production in the coming months."
She did note, however, that input cost inflation accelerated significantly in October, reaching a near eight-year high, as strong global demand for scarce raw materials continued to drive up prices for these items.