The manufacturing activity in the month of November was at a three-month low; still, it has significantly expanded. The manufacturing PMI stood at 56.3, compared to 58.9 in October, according to the IHS Markit report. While all three broad areas of the manufacturing industry recorded expansion, the growth was led by consumer goods, which was the only sector to see a stronger rate of increase, the report added. It is believed that the loosening of Covid-19 restrictions, combined with an improvement in market conditions and a pick-up in demand, supported another increase in production.
“The Indian manufacturing sector remained on the right path to recovery, with strong growth of new orders and output sustained during November,” said Pollyanna De Lima, Economics Associate Director at IHS Markit. Although the softening of rates of expansion seen in the latest month does not represent a major setback, since these are down from over decade highs in October, a spike in COVID-19 cases and the possibility of associated restrictions could undermine the recovery, Pollyanna added.
Employment woes continue
Employment decreased again as companies observed social distancing guidelines. The rate of job shedding was solid and little-changed from October. Subsequently, firms noted another increase in outstanding business during November. Employment remained in contraction territory, however, with companies reportedly keeping the minimum possible number of workers as per government guidelines, Pollyanna further said.
Meanwhile, the quick rebound in manufacturing GVA growth in the current fiscal’s second quarter has surprised the market, as in the same duration, the growth of industrial production significantly plunged. The manufacturing sector recovered from a 39.3 percent contraction in Q1 to a 0.6 percent growth in Q2, while the manufacturing IIP still fell by 6.8 per cent in Q2, according to the Ministry of Statistics and Programme Implementation (MOSPI).