India’s manufacturing recovery lost momentum in August with the survey-based Purchasing Managers’ Index (PMI) sliding to 52.3. from July’s 55.3. as demand showed ‘signs of weakness due to the pandemic’ and input price pressures persisted. Growth in new orders softened, pushing the expansion below the long-term average.
With overall optimism weakening last month, there was a fresh pause on hiring in the sector that had resumed recruitment in July after shedding jobs for 15 months. A score below 50 on the IHS Markit index indicates a contraction. The PMI had slipped to 48.1 in June, as the second COVID-19 wave took its toll.
Pollyanna De Lima, economics associate director at IHS Markit, said August saw the Indian manufacturing sector extend its recovery, but growth lost momentum as demand weakened.
“Yet, factory orders and output rose across the consumer, intermediate and investment goods categories,” she said. “The 12-month outlook for production remained positive, though confidence faded amid worries concerning the lasting scars of the pandemic and the adverse impact of rising costs on companies' finances parallel to a lack of pricing power,” she explained.
Manufacturers’ cost burdens have now been rising for 13 straight months, and were linked by producers to raw material scarcity and transportation problems.
“August data pointed to back-to-back increases in new export orders, but here too growth lost momentum. The pace of expansion was only marginal,” the economics research firm added