Manufacturing activity's growth in India was sluggish in August 2021 due to the Coronavirus pandemic and increasing input costs. IHS Markit's Purchasing Managers' Index (PMI) fell from 55.3 in July 2021 to 52.3 in August 2021. Also hiring activity came to a pause as business confidence got dampened due to Covid's impact.
"Growth of manufacturing production in India was curbed in August by the pandemic and rising input costs. A softer upturn in sales led companies to pause their hiring efforts, with business confidence dampened by concerns surrounding the damaging impact of COVID-19 on demand and firms' finances," the survey said in its report.
"Employment levels were broadly stagnant in August as companies reportedly had sufficient workforces to cope with current requirements and confidence remained subdued. Although output was predicted to increase in the year ahead, the overall degree of optimism weakened from July," the survey said while commenting on the jobs scenario.
It further noted that at the same time as order books still expanding and businesses retaining optimistic growth projections, stock-building efforts continued and additional materials were bought. On the price front, a softer but still sharp rise in input costs underpinned a quicker increase in charges.
"Manufacturing production increased for the second straight month in August amid reports of improved sales and demand. However, growth was curbed by the pandemic and elevated price pressures," the IHS survey observed.
Taking an overall view, the survey said that the expansion rate was modest and below its long run average.
"New orders also rose for the second straight month, and at a softer pace. Some firms suggested that favourable market conditions and fruitful advertising boosted demand for their goods. Others noted that sales fell due to the pandemic," the report said.
The August data also pointed to back-to-back increases in new export orders, but here too growth lost momentum. The pace of expansion was only marginal. Indian manufacturers signalled another monthly rise in cost burdens, thereby taking the current stretch of inflation to 13 months.