India's factory hiring at 3-year high, says survey

1 Nov 2022 , 12:20 PM

According to a private poll released on Tuesday, India’s factory activity increased at a faster rate in October as demand and output remained strong. This encouraged businesses to hire people at the strongest rate in almost three years.

Since the beginning of this year, India has demonstrated greater resilience to continuously rising inflation and a declining currency value relative to the US dollar than several other economies.

The S&P Global-compiled Manufacturing Purchasing Managers’ Index increased to 55.3 in October from 55.1 in September, above the median estimate of 54.9 in a Reuters poll and maintaining over the 50-level separating growth from contraction for a sixteenth month.

Growth was nonetheless strong last month despite a slower rate of total demand and output expansion, with international demand rising at its fastest rate since May.

Because of this, businesses have been adding employees at the fastest rate since January 2020. Future output expectations also remained more optimistic than the long-term norm.

Since prices charged increased at their slowest rate since February and input price inflation remained at or near the previous month’s level, it was expected that overall inflation, which reached a five-month high in September, would slow.

That could give the Reserve Bank of India some breathing room since it is anticipated that in the upcoming months it will pursue a gentler approach to rate increases than its major peers.

The rupee, which has fallen more than 10% against the dollar this year, could weaken even more as a result of the widening policy divide between the dovish RBI and the hawkish U.S. Federal Reserve. This suggests that the central bank may continue to deplete its dollar reserves to support the currency.

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