India's Manufacturing PMI Slips In August; Constrained By COVID-19, Surging Costs

The IHS Markit India Manufacturing Purchasing Managers' Index was 52.3 in August, down from 55.3 in July. A reading of more than 50 implies that the economy is expanding.

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index registered 52.3 in August, indicating an improvement in overall operating conditions for the second month in a row.

However, the headline figure fell from 55.3 in July, indicating a slower rate of growth that was muted in comparison to previous survey data.

Manufacturing output rose for the second month in a row in August, owing to improved sales and demand. However, the pandemic and rising price constraints slowed growth. The total pace of growth was modest and well below its long-term norm.

Back-to-back rises in new export orders were reported in August, but growth slowed. The rate of expansion was very slow. Indian manufacturers have signaled yet another monthly increase in cost burdens, bringing the current inflationary streak to 13 months. Although the rate of increase slowed, it remained high by historical standards. Members of the poll-related cost concerns with raw material scarcity and transportation issues.

In August, employment levels remained largely unchanged, as businesses allegedly had adequate workforces to meet existing demands, while confidence remained low. Despite the fact that output is expected to rise in the coming year, the overall level of optimism has dwindled since July.

Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said: "August saw a continuation of the Indian manufacturing sector recovery, but growth lost momentum as demand showed some signs of weakness due to the pandemic. Yet, factory orders and output rose across the consumer, intermediate, and investment goods categories.