PMI: India's Factory Activity Expands At Fastest Rate In 8 Years In Sept

Amid relaxed coronavirus pandemic norms, India's factory activity recovered at its fastest pace in over eight years in September, a private survey showed on Thursday.

Despite layoffs, a pick up in demand and output Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, jumped to 56.8 in September from 52.0 in August. The PMI reading has been above the 50-level, indicating expansion, for the second straight month.

It has been the highest reading since January 2012.

"The Indian manufacturing industry continued to move in the right direction, with PMI data for September highlighting many positives. Due to loosened COVID-19 restrictions, factories went full steam ahead for production, supported by a surge in new work," said Pollyanna De Lima, economics associate director at IHS Markit.

"While uncertainty about the COVID-19 pandemic remains, producers can at least for now enjoy the recovery."

Input prices increased at a slower rate in September, however, manufacturers raised their selling prices after having to cut them since March to secure sales.

Despite the significant rebound, firms cut staff for the sixth month in a row when coronavirus-related distortions have already left millions jobless.

Experts do not expect the manufacturing sector to get much support from the Reserve Bank of India over the coming months as persistently high inflation is expected to force the RBI to remain on the sidelines.

Business optimism about the coming 12 months hit its highest since August 2016.

The fastest pace in manufacturing activity growth bring cheer to the Indian economy that is expected to see its full-year contraction this financial year for the first time since 1979.