Bikky Khosla | 02 Nov, 2020
In a positive development, the Indian
manufacturing sector in October registered
growth for the third straight month to a 13-year high. The headline seasonally adjusted IHS Markit India Manufacturing
Purchasing Managers' Index (PMI) rose to a six-month
high of 52 in August from 46 in July. Then it further recovered to 56.8 in September, followed now by 58.9 last month. Indian
manufacturers lifted their production at the strongest pace recorded since late
2007, riding on several positive factors.
The IHS report indicated that softer
COVID-19 containment measures, along with improved demand and better market
conditions, helped the sector secure new works in October. While upturn in
sales was the strongest since mid-2008, export orders also rose at a
quicker pace in close to six years. The report adds that growth in October was
led by the intermediate goods category, but robust expansion was also witnessed
in the consumer and investment goods sub-sectors. These trends are encouraging.
Reactions to this spurt in manufacturing are mixed.
According to some, the spike in manufacturing in October is driven by pent up
demand and inventory building ahead of the festive season, and therefore, these
trends may not sustain after the festive season is over. According to some
others, sales should remain strong in the coming months as well, considering the
upturn in October input buying, which, the report finds, increased at a
quicker pace than in September.
Meanwhile, according to latest official figures, though deceleration
in the production of eight major industries continued in September, the fall
was contained at much lower levels than previous months. The Index fall by 0.8
(provisional) percent y-o-y in the month, while the contraction rate was a
sharp (-) 7.3 percent (revised) in August. The latest figures are great relief
as the core sector maintained a double-digit negative growth in each month of
the April-June quarter.
I invite your opinions.