The Financial Express

India's factory output rebounds in Aug after four months of contraction

| Updated: September 03, 2020 13:20:49

File photo (Collected) File photo (Collected)

India's manufacturing sector bounced back in August amid improved customer demand and relaxation of coronavirus (Covid-19) lockdown, as per a survey released on Tuesday.

The Purchasing Managers' Index (PMI) rose to 52 in August from 46 in the preceding month after four consecutive months of contraction, indicated the survey conducted by IHS Markit, a London-based global information provider that compiles the index.

A PMI score above 50 indicates expansion while below it denotes contraction, reports XInhua.

The August data is a booster dose for Asia's third largest economy, which on Monday reported its steepest fall in headline gross domestic product (GDP) numbers in 40 years by reporting 23.9 per cent contraction in the April-June quarter over the same quarter last year.

"August data highlighted positive developments in the health of the Indian manufacturing sector, signalling moves towards a recovery from the second quarter downturn. The pick-up in demand from domestic markets gave rise to upturns in production and input buying," said Shreeya Patel, Economist at IHS Markit.

However, delivery times during the month under review lengthened due to ongoing Covid-19 disruption while employment continued to fall as firm struggled to find suitable workers, Patel said.

Reports of higher raw material costs due to supplier shortages and transportation delays stemming from the pandemic, resulted in rising input prices during August.

Looking ahead, Indian manufacturers remained optimistic for the next 12 months, backed by improving client demand, and new business wins though the country ranks third after the United States and Brazil in terms of Covid-19 infections.

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