A gauge of activity across India’s manufacturing sector remained steady despite cost inflation pressures.
The IHS Markit India Manufacturing Purchasing Managers’ Index stood at 57.5 in February compared with 57.7 in January, according to a media statement. A reading above 50 indicates economic expansion.
Better demand conditions and successful marketing campaigns underpinned a further increase in new orders during February, the statement said. Although easing from January, the pace of growth remained sharp in the context of historical data. As such, production increased again in February and the pace was among the quickest in nine years. Input inventories rose at the strongest pace in the survey’s history as firms reacted to rising production needs by lifting purchasing activity.
Demand continued to be domestic-led, as the pandemic restricted international demand for Indian goods.
Robust domestic demand for inputs prompted suppliers to hike fees with the overall rate of cost inflation at a 32-month high. Although factory-gate charges rose in February, the rate of inflation was modest and eased from the 13-month high in January. The backlog of work increased at the fastest pace in three months.
Payroll numbers, however, fell for the eleventh straight month, the statement said, citing the government guidelines to contain the Covid-19 spread by implementing working in shifts.
Growth projections remained optimistic for the future, with an improvement in economic conditions and lifting of restrictions as the vaccination programme expands.