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.