NEW DELHI: A day after the GST collection figures for October showed a robust uptick, rising past the `1 lakh crore mark, results of a monthly survey on factory output on Monday brought more cheer to the economy.
As sales continue to surge in the ongoing festive season, India’s manufacturing sector activity improved for the third straight month in October, a monthly survey among purchasing managers of 400 manufacturers said on Monday.
The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) rose to 58.9 in October — the highest since mid-2008. In PMI parlance, an index reading above 50 indicates growth. “New orders and output at Indian manufacturers continued to recover from Covid-19-induced contractions seen earlier, with PMI results for October highlighting historically sharp monthly rates of expansion,” said Pollyanna De Lima, economics associate director, IHS Markit.
While the latest PMI data along with the impressive GST numbers released on Sunday may give the impression the economy is recovering, experts advise caution. According to them, festive season can spur economic activities but one needs to watch if the trend continues beyond the festive season.
“One needs to be cautious while reading this number. This is festive season and we are coming from a severe lockdown, which needs to be taken into account. One should watch post December trends, after the festive season,” said Madan Sabnavis, Chief Economist, CARE Ratings.
Another growing concern was that despite increase in demand, manufacturers recorded a further reduction in employment.
“There was disappointing news on the employment front though, with October seeing another reduction in payroll numbers. Survey participants that noted job shedding mentioned having observed containment measures to halt the spread of the coronavirus disease 2019,” the survey said. This indicates employers are cautious, despite their optimism that things will improve in the coming months.
Job cuts continue for 7th month in a row
The survey said companies cut staff for the seventh month in a row, a streak not witnessed since the survey began in 2005. It, however, did not indicate the quantum of job loss