India's manufacturing growth stays robust in August, inflation eases

India's manufacturing sector remained robust in August, with new orders and production reaching their highest levels since November. The manufacturing S&P Global India Purchasing Managers' Index (PMI) decreased from a reading of 56.4 in July to 56.2 in August.

A reading of 50 or more suggests expansion, while one below that number implies contraction. India's manufacturing activity increased for the fourteenth consecutive month.

In August, new orders were boosted by demand, driving output growth to a nine-month high. According to the monthly report, an increase in exports and optimistic predictions for the year ahead increased production numbers. The fastest production growth in nine months was attributed to better sales, capacity expansion efforts, product diversity, and less Covid-19 restrictions.

The findings also showed that recent inflation concerns had somewhat subsided and that business sentiment had improved from its 27-month low reached in June. Business confidence was raised in August as a result of forecasts for higher sales, more inquiries, and marketing initiatives. Lower commodity prices, particularly for steel and aluminium, contributed to a reduction in inflation.

Although the rate of input cost inflation slowed to its lowest level in a year due to increased freight, labour, and material costs passed on to customers, the rate of increase in output prices remained largely unchanged from July.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.