Factory activity improved in September, but companies reduced workforce: PMI

Factory activity improved in September, but companies reduced workforce: PMI

India’s factory activity improved last month as the economy recovered from the pandemic-induced slowdown, boosted demand and output, but firms reduced headcount at the fastest pace since May, according to a private survey.

Backed by ultra-easy monetary policy and sustained fiscal spending, this recovery could continue for at least a few months.

The Reserve Bank of India’s key interest rate hike seems a rare possibility until at least the next financial year and India’s government said earlier this week that it would continue with its lending-backed spending to revive the economy. .

The Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, rose to 53.7 in September from 52.3 in August, remaining above the 50-level for the third straight month separating growth from contraction.

“Indian manufacturers ramped up production substantially in September as they prepared to improve demand and offset stocks,” said Poliana de Lima, economics associate director at IHS Markit.

“There was a substantial increase in the intake of new work, with some contribution from international markets.” New orders expanded at a faster rate in September due to improved domestic and foreign demand, and factories increased production at a much faster rate than in August.

However, this failed to encourage factories to hire more workers – a much-needed move given the weak labor market conditions – and instead increased their workforce at the fastest pace in four months. reduced from.

De Lima said, “Companies continued to buy additional inputs in September, but jobs changed little in the month. In some instances, survey participants indicated that government guidelines around shift work prevented recruitment.”

Meanwhile, input cost inflation rose to a five-month high after moderating in the first two months of the previous quarter, partly driven by rising fuel prices, transportation costs and supply-chain disruptions.

But production prices increased at a weak pace, indicating that companies were only partially able to pass on the additional costs to customers.

Still, optimism about the coming year improved slightly last month as the pandemic’s continued easing of mobility restrictions raised hopes of a further recovery in demand.

(Only the title and image in this report may have been reworked by Business Standard staff; the rest of the content is generated automatically from a syndicated feed.)

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