Moneycontrol PRO
Open App

Growth first time since March: India's August Manufacturing PMI at 52

Job shedding continued into August at a strong rate, extending the current sequence of decline to five months

September 01, 2020 / 11:37 AM IST
Representative Image

Representative Image

India’s Manufacturing Purchasing Managers’ Index (PMI) for August has come in at 52, compared to 46 in July, signalling growth and rebound in production volumes for the first time in five months.

For the first time since March, output expanded in the Indian manufacturing sector in August. Production growth was largely driven by greater client demand for Indian goods following the resumption of business operations, according to firms.

“The upturn was led by an improvement in customer demand as client businesses reopened, after lockdown restrictions eased amid the COVID-19 pandemic,” IHS Markit said. It added that output and new orders expanded at the fastest paces since February – recording a 21-month high.

The decline in foreign exports weighed slightly on overall new orders as firms cited subdued demand conditions from abroad.

“That said, new business received by Indian manufacturers expanded at the fastest pace since February,” it adds.


COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more

It, however, notes that - despite easing from July - job shedding continues in August at a strong rate, extending the current sequence of decline to five months. The pace of contraction in workforce numbers softened from that seen in July but remained strong overall.

Higher levels of production supported a modest rise in the quantity of purchases during August, but firms told Markit that limited availability of goods, which onset a further reduction in stocks of purchases, has extended the current rate of depletion to five months.

Supply chains were disrupted for a sixth consecutive month, with firms citing transportation restrictions, supplier delays and capacity pressures as the main drivers of lengthening delivery times.

Reports of higher raw material costs due to supplier shortages and transportation delays stemming from the COVID-19 pandemic, resulted in rising input prices during August.

Cost burdens rose for the first time since March, with the rate of input price inflation at its highest since November 2018. Despite rising cost burdens, Indian manufacturers reported lower factory gate charges due to competitive pressures and efforts to boost sales.

However, the rate of decline eased to only a fractional pace that was the weakest in the current sequence of decrease.

Looking ahead, Indian manufacturers remained optimistic for the next 12 months.

“Positive sentiment was often attributed to hope of the passing of COVID-19 pandemic, improving client demand, and new business wins. Nevertheless, market uncertainty and the onset of a global recession weighed slightly on the degree of confidence which was below the series average in August,” it notes.
Moneycontrol News
first published: Sep 1, 2020 11:37 am
ISO 27001 - BSI Assurance Mark