NEW DELHI: After some smart recovery last month, the pace of growth of manufacturing sector slowed down in August, mainly on account of Covid-induced curbs and rising input costs, forcing companies to pause their hiring, says IHS Markit Purchasing Managers’ Index (PMI).
According to the report issued on Wednesday, the index for manufacturing fell to 52.3 in August from 55.3 in July. A reading above 50 is expansion and one below that shows contraction. PMI was 48.1 in June.
Employment levels were broadly stagnant in August as companies reportedly had sufficient workforces to cope with current requirements and confidence remained subdued.
This put a brake on the rise in hiring seen in the previous month.
“Uncertainty regarding growth prospects, spare capacity and efforts to keep a lid on expenses led to a hiring freeze in August, following the first upturn in employment for 16 months in July,” said Pollyanna De Lima, economics associate director at IHS Markit.
On a positive note, with order books still expanding and businesses retaining optimistic growth projections, stock-building efforts continued and additional materials were bought.
Once again there was an increase in new export orders, even when it was only marginal. On the price front, a sharp rise in input costs underpinned a quicker increase in charges.
Indian manufacturers signalled another monthly rise in cost burdens, thereby taking the current stretch of inflation to 13 months.