- India’s factory activity expanded at its fastest pace in September in more than 8 years
- The sub-index tracking output has hit its highest since December 2007
- The new orders surged at the maximum pace since February 2012
- Despite the surge, layoffs are still ongoing
India’s factory activity has surged at its fastest pace in more than 8 years in September as relaxations in the lockdown put in place to curb the spread of the novel Coronavirus was seen all across the country which drove an increase in the demand and output, a private survey showed on Thursday, however, the layoffs in India are still ongoing.
The signs of recovery are welcomed by the third largest economy of Asia continent which is widely expected to its first complete year contracting since the year 1979, in 2020.
The Coronavirus pandemic is spreading in India at its fastest and as of now is also the fastest pace from all around the world.
According to the Nikkei Manufacturing Purchasing Managers’ Index, which has been compiled by the IHS Markit, jumped to 56.8 in September from 52.0 in August this year, which is above the 50-level separating growth from contraction for a second straight month.
This was the highest reading since January of 2012.
The Economics Associate Director at HIS Markit, Pollyanna De Lima said, “The Indian manufacturing industry continued to move in the right direction, with PMI data for September highlighting many positives. Due to loosened COVID-19 restrictions, factories went full steam ahead for production, supported by a surge in new work,”.
Lima added, “While uncertainty about the COVID-19 pandemic remains, producers can at least for now enjoy the recovery.”
A sub-index tracking output has hit its highest since December of 2007 and the new orders have expanded at the loudest pace since February of 2012, this was helped by both domestic and foreign demand which has seen a growth for the first time in past seven months.
Even though the input prices increased at a rather slower rate in September 2020, the manufacturers raised their selling prices after having cut them since March to secure the sales during the lockdown.
Despite the significant rebound, the companies in the country cut their human resource for the sixth month in a row in 2020. The Coronavirus-related distortions have already rendered millions of people unemployed.
An article from a leading news agency wrote, “The sector is unlikely to get much support from the Reserve Bank of India over the coming months as persistently high inflation is expected to force the RBI to remain on the sidelines.”
Earlier this week, the Reserve bank of India (RBI) postponed a policy committee meeting which was scheduled for the 29th of September and was supposed to be held until 1st October. The apex bank rescheduled the meeting but did not tell a reason for the postponement.
Nonetheless, the business optimism about the coming 12 months has hit its highest since August of 2016.