India’s Manufacturing PMI jumps to a decade high in October, output rises at quickest pace since October 2007

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India's Manufacturing Sector activity improved for the third straight month to a high in more than 13 years for the month of October.

IHS Markit Purchasing Manufacturing Index which indicates the manufacturing sector's sentiments rose to 58.9 in October from 56.8 in September.

“In our view, several sectors are showing signs of an upturn that is being fuelled by pent up demand and inventory building ahead of the festive season, as well as a favourable base effect," Aditi Nayar, Principal Economist at ICRA Ltd.  told Moneycontrol.

"Such trends may not sustain after the festival season is over, and momentum may flag after December 2020. We await concrete signs of a durable uptick in demand.” Nayar said.

Manufacturers indicated that the ongoing relaxation of COVID-19 restrictions, along with better market conditions, and improved demand helped them to secure new work in October. Moreover, the upturn in sales was the strongest since mid-2008. New export orders likewise rose at a quicker pace, one that was the most pronounced in close to six years, the report said.

Greater production needs led to another monthly increase in input buying among Indian manufacturers. Moreover, quantities of purchases rose at the quickest pace in just under nine years.  Inflationary pressures, on the other hand, stayed subdued as seen by a modest increase in input costs and only a marginal rise in selling prices.

Export orders also rose at a quicker pace in close to six years.

While input costs increased at a quicker pace than in September, the overall rate of inflation was modest by historical standards. A few firms increased output charges, while the vast majority left their fees unchanged from September. As a result, the overall rate of charge inflation was negligible, as per the report.

The IHS Markit report stated that the growth was led by the intermediate goods category, but there were also robust expansions in the consumer and investment goods sub-sectors.

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-19 induced contractions seen earlier in the year.”

"Companies were convinced that the resurgence in sales will be sustained in the coming months, as indicated by a strong upturn in input buying amid restocking efforts.”​

This index is compiled from the responses of 400 manufacturers.