Manufacturing PMI at a decade-high as factories recover from Covid blues

A day after a set of high-frequency economic indicators showed impressive gains, Manufacturing Purchasing Managers’ Index (PMI) for October surged to 58.9 on Monday, the highest reading since May 2010.

Last month, manufacturing sector conditions in the country continued to improve, with companies raising output to a 13-year high amid robust sales growth, said IHS Markit, the agency which tabulates PMI on the basis of responses from purchasing managers of some 400 manufacturers.

The PMI index ranges from 0 to 100, with a reading above 50 indicating an increase compared to the previous month, and below 50, a decrease.

Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said levels of new orders and output at Indian manufacturers continued to recover from the Covid-induced contractions seen earlier in the year, with the PMI results for October highlighting historically high monthly rates of expansion.

Companies appear convinced that the resurgence in sales will sustain over the coming months, as indicated by a strong upturn in input buying amid restocking efforts.

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Confidence improves

Also, confidence on the outlook for the year-ahead improved as firms hoped that Covid-19 cases will abate and more businesses will reopen.

October growth was led by the intermediate goods category, but there was also robust expansions in the consumer and investment goods sub-sectors.

Manufacturers indicated that the phased unlocking, better market conditions and improved demand helped them secure new projects last month.

Moreover, the uptick in sales was the strongest since mid-2008. New export orders likewise rose at a quicker pace — the most pronounced in close to six years.

Payroll numbers fall

The good news on the manufacturing front did not however transmit to the employment front, though, with October seeing another reduction in payroll numbers.

“Survey participants that noted job shedding mentioned having observed containment measures to halt the spread of the coronavirus disease,” De Lima said.

Other indicators

On Sunday, the Centre reported GST collections in October growing 10 per cent to reach ₹1.05-lakh crore.

Power consumption surged 13 per cent while petrol and diesel sales rose over 4 and 6.6 per cent, respectively, in October. Car companies hit the fast lane reporting sales racing up to 18 per cent while railway freight gathered pace at nearly 15 per cent.

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