India’s factory growth highest in over a decade as demand bounces back

Asia's third-largest economy saw a second consecutive month of record factory activity performance in October, a private survey has showed, with output expanding at the highest rate in 13 years.

The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) rose to 58.9 last month from 56.8 in September on the back of the ongoing relaxation of Covid-related restrictions.

The readings show that India’s economy is healing after shrinking by a record 23.9 percent in the April-June quarter.

Output expanded by the greatest amount since late 2007 and new order growth hit its highest level since mid-2008, with export sales rising at a quicker pace. Foreign demand expanded at its fastest rate since December 2014.

“Companies were convinced that the resurgence in sales will be sustained in coming months, as indicated by a strong upturn in input buying amid restocking efforts,” said Pollyanna De Lima, economics associate director at IHS Markit.

According to the survey, payroll numbers were lowered due to government guidelines related to the pandemic, while “backlogs of work rose the least in the current six-month period of accumulation.”

Pressure on supplier capacity subsided, as indicated by the slowest rise in delivery times for seven months. Inflationary pressures remained subdued, meanwhile, as evidenced by a modest increase in input costs and only a marginal rise in selling prices.

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, said the report. The level of business confidence was at a 50-month high, it added.

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