India's Manufacturing PMI Remains Steady In August

A gauge of activity across India's manufacturing sector remained steady in August as input cost inflation receded.

The India Manufacturing Purchasing Managers' Index stood at 56.2 in August against 56.4 in July, according to a media statement by IHS Markit. A reading above 50 indicates expansion.

The figure signalled the second-strongest improvement in operating conditions since last November, the release stated. Contributions to the PMI from sub-indices varied as faster increases in new orders and output compared with slower expansions in employment and stocks of purchases.

Indian manufacturers reported the fastest increase in production in nine months on greater sales, recent efforts to enhance capacities, fewer Covid-19 restrictions and product diversification.

Factory orders, too, rose at the quickest pace since last November. International markets gave impetus to total sales, as seen by a marked and quicker increase in new export orders halfway through the second fiscal quarter.

Business sentiment saw a pickup. “In fact, the degree of optimism was at its highest in six years,” the release said. Predictions of stronger sales, new enquiries and marketing efforts all boosted confidence in August.

Although manufacturers continued to signal higher prices for a wide range of materials in August, the overall rate of cost inflation softened to a one-year low as commodity prices (particularly aluminium and steel) moderated.

"Firms welcomed the weaker increase in input costs and upward revision to output forecasts amid renewed hopes that contained price pressures will help boost demand," Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said in the statement. "Inflation concerns, which had dampened sentiment around mid-year, appear to have completely dissipated in August as seen by a jump in business confidence to a six-year high."