'Aug mfg activity trends higher on strong demand, inflation eases'

NEW DELHI: India’s manufacturing sector activity in August witnessed the second-strongest improvement in operating conditions in nine months, boosted by strengthening demand conditions and softening inflation concerns, a monthly survey said on Thursday.

Production volumes were also supported by a pick-up in exports and upbeat projections for the year-ahead outlook. Firms were at their most optimistic for six years.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) was little changed from July’s reading of 56.4, posting 56.2 in August.

The August PMI data pointed to an improvement in overall operating conditions for the 14th straight month. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.

“Indian manufacturers continued to benefit from the absence of COVID-19 restrictions, with rates of growth for both output and new orders picking up yet again to the strongest since last November,” Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said.

The latest results also indicated recent inflation concerns somewhat faded, as business sentiment strengthened further from June’s 27-month low. The degree of optimism was at its highest in six years. Predictions of stronger sales, new enquiries and marketing efforts all boosted confidence in August, the survey said.

On the inflation front, although manufacturers continued to signal higher prices for a wide range of materials in August, the overall rate of cost inflation softened to a one-year low as commodity prices (particularly aluminium and steel) moderated.