NEW DELHI: Indias manufacturing activity eased marginally in February but stayed above the long-run average as firms raised input inventories at a record pace, with strong growth in sales and production, a private survey said.Data released by analytics firm IHS Markit on Monday showed that the Purchasing Managers Index (PMI) for India’s manufacturing sector fell to 57.5 in February from 57.7 a month ago. A figure above 50 indicates expansion, while sub-50 reading signals contraction. The headline figure was above the long-run average of 53.6.
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“Better demand conditions and successful marketing campaigns reportedly underpinned a further increase in new orders during February. Although easing from January, the pace of growth remained sharp in the context of historical data,” IHS Markit said in a statement.
Pollyanna De Lima, Economics Associate Director at IHS Markit, said Indian goods producers reported a healthy inflow of new orders in February, a situation that underpinned a further upturn in output and quantity of purchases.
“Still, the data indicated that production growth could have been stronger should firms have appropriate resources to handle their workloads. This was evident from a quicker rise in outstanding business and another decline in inventories of finished goods,” she added.
February’s data pointed to the strongest increase in input inventories in the survey history as firms reacted to rising production needs by boosting purchasing activity. The expansion in input buying was the fastest in almost a decade.
“In turn, robust demand for inputs led suppliers to hike their fees. Survey members noted greater prices for a number of items such as chemicals, metals, plastics and textiles. The overall rate of cost inflation hit a 32-month high,” the analytics firm said.
Despite robust production and sales growth, payroll numbers fell further amid the observance of government guidelines aimed at halting the spread of covid-19 by implementing shift work. The decline was the eleventh in successive months.
De Lima said some companies indicated that capacity expansion through hiring was not currently possible due to existing restrictions on labour working hours. “However, many hope that such controls will shortly be removed as the vaccination programme widens. Once larger parts of the population are immunised against COVID-19 and restrictions start to be lifted, companies expect a gradual improvement in economic conditions which they hope will translate into output growth. The overall degree of business optimism was the joint-highest for three months,” she added.
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