After returning to expansion territory in August, manufacturing sector growth gathered momentum in September. The PMI reached its highest mark since January 2012, supported by accelerated increases in new orders and production.
Concurrently, there were renewed expansions in export sales and input stocks as well as an improvement in business confidence. Output prices rose for the first time in six months, reflecting an uptick in input costs.
Amid reports of loosened coronavirus disease 2019 (Covid-19) restrictions and higher demand, Indian manufacturers lifted output for the second straight month in September. The increase was sharp and the third-quickest in the history of the survey.
On the price front, there was a softer and historically weak rise in input costs. Firms reported higher prices paid for a few materials such as aluminium and steel. Output charges, meanwhile, broadly stabilised following five successive months of reduction.
Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, 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. Exports also bounced back, following six successive months of contraction, while inputs were purchased at a sharper rate and business confidence strengthened.
"One area that lagged behind, however, was employment. Some companies reported difficulties in hiring workers, while others suggested that staff numbers had been kept to a minimum amid efforts to observe social distancing guidelines. When we look at the PMI average for the second quarter of fiscal year 2020/21, the result is in stark contrast to that seen in the first quarter: a rise from 35.1 to 51.6. While uncertainty about the Covid-19 pandemic remains, producers can at least for now enjoy the recovery," Pollyanna De Lima added.