Growth of manufacturing sector in India was limited in August owing to the pandemic and a sharp increase in input costs, according to IHS Markit survey.
Businesses and associations continue to project optimistic growth while stock-building efforts continued, and additional materials were bought in August. IHS Markit report suggested that input prices for the manufacturing sector rose sharply although have softened which bolstered a hike in charges.
India’s Manufacturing Purchasing Managers’ Index (PMI) was registered at 52.3 in August which pointed to an improvement in operating conditions for the second consecutive month. In July, the PMI was at 55.3.
Manufacturing jumped for the second straight month in August as sales and demand improved in general. Growth was, however, softer curbed by COVID-19 and a hike in prices while the overall rate of expansion was modest and below its long run average.
Some firms reported a jump in sales while others noted a fall due to the pandemic. Export orders witnessed a growth, but momentum had reduced. Pace of expansion was only marginal.
Cost pressured that firms faced were primarily on the back of raw material scarcity and transportations issues, noted the IHS report.
firms purchased additional materials thereby pre-production inventories continued to rise in tandem with greater output needs. Both buying levels and inventories increased at softer rates, however, tight supply of raw material and empty containers resulted in a further delay in average lead times.