India’s factory activity grew at its fastest rate in eight months in October owing to solid demand and higher output, although rising raw material costs clouded the outlook, according to a survey of Purchasing Managers’ Index (PMI). India’s manufacturing PMI came in at 55.9 in October, rising from September’s 53.7 and marking the highest reading since February. The index has stayed above the 50-point threshold for four consecutive months.
Indian manufacturers ramped up output last month to build up stocks to anticipate higher demand. India’s factory activity is expected to continue expanding throughout the quarter ended December 31, analysts said. The latest survey showed the sub-index for new orders increased to a seven-month high of 58.7 in October. Export demand also expanded at its fastest pace since July, encouraging manufacturers to increase output.
However, companies reduced jobs for a third straight month despite improved operating conditions. This is often attributed to sufficient capacity to meet current workloads and the government’s norms regarding shift work. The survey also showed that input costs surged at the quickest pace in almost a decade last month. This forced firms to pass on higher costs to end-users. That suggests India’s overall inflation would likely remain elevated in 2022.
