India’s factory activity grew at the fastest pace in eight months in October on strong demand and increased production, a private survey showed, though another jump in raw material costs cast a shadow on the outlook.
Monday’s data pointed to an extended trade recovery in Asia’s third-largest economy from the pandemic-induced slowdown and, with rising price pressures, could boost ideas reserve Bank of India Like other major central banks, will tighten monetary policy earlier than expected.
Manufacturing Purchasing Managers Index, compiled by? IHS Market, rose from 53.7 in September to 55.9 in October, the highest since February, and remains above the 50-level for the fourth consecutive month separating growth from contraction.
“As companies gear up for further recovery in demand by building up their stocks, it looks like manufacturing activity will continue to expand in the third quarter of fiscal year 2021/22, should the pandemic remain under control,” said Pollyanna D. Lima, associate director of economics at IHS Markit, said in a release.
“Enthusiastic business confidence and projects in the pipeline should also support production in the coming months.”
The latest survey showed that the new orders sub-index, a proxy for domestic demand, rose to 58.7 last month, the highest in seven months. Foreign demand also expanded at the fastest pace since July, encouraging firms to ramp up production.
However, the firms lost jobs for the third consecutive month.
“Despite an overall improvement in operating conditions, jobs failed to grow. This was often tied to the current workload and sufficient capacity to cope with government norms surrounding shift work,” De Lima said.
Last month, input costs increased at the fastest pace in nearly a decade, putting pressure on manufacturers to pass on some of the burden to customers. This suggests that overall inflation will remain high in the coming year.
The recent rise in global crude oil prices to $85 a barrel is also troubling policymakers and consumers, as India meets more than 80% of its oil needs through imports.
But the RBI does not expect to raise interest rates until at least the beginning of the next financial year, in April-June 2022, a separate Reuters survey showed.
Monday’s data pointed to an extended trade recovery in Asia’s third-largest economy from the pandemic-induced slowdown and, with rising price pressures, could boost ideas reserve Bank of India Like other major central banks, will tighten monetary policy earlier than expected.
Manufacturing Purchasing Managers Index, compiled by? IHS Market, rose from 53.7 in September to 55.9 in October, the highest since February, and remains above the 50-level for the fourth consecutive month separating growth from contraction.
“As companies gear up for further recovery in demand by building up their stocks, it looks like manufacturing activity will continue to expand in the third quarter of fiscal year 2021/22, should the pandemic remain under control,” said Pollyanna D. Lima, associate director of economics at IHS Markit, said in a release.
“Enthusiastic business confidence and projects in the pipeline should also support production in the coming months.”
The latest survey showed that the new orders sub-index, a proxy for domestic demand, rose to 58.7 last month, the highest in seven months. Foreign demand also expanded at the fastest pace since July, encouraging firms to ramp up production.
However, the firms lost jobs for the third consecutive month.
“Despite an overall improvement in operating conditions, jobs failed to grow. This was often tied to the current workload and sufficient capacity to cope with government norms surrounding shift work,” De Lima said.
Last month, input costs increased at the fastest pace in nearly a decade, putting pressure on manufacturers to pass on some of the burden to customers. This suggests that overall inflation will remain high in the coming year.
The recent rise in global crude oil prices to $85 a barrel is also troubling policymakers and consumers, as India meets more than 80% of its oil needs through imports.
But the RBI does not expect to raise interest rates until at least the beginning of the next financial year, in April-June 2022, a separate Reuters survey showed.
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