Higher sales before the onset of festive season, improved capacities and elimination of all COVID-related restrictions have led Indian manufacturers to report the fastest increase in production in nine months, it noted.
The narrative on the supply-side also exhibited some recovery with further improvement in delivery times as supply-chain bottlenecks ease.
India’s manufacturing purchasing managers’ index continued a steady path with the index remaining fairly stable at 56.2 in August compared to 56.4 in July, according to Acuite Ratings & Research, which attributed the sustained momentum to favorable factors like improvement in demand conditions, pick up in new business orders and strong output growth.
On the price front, inflation concerns seem to have partially abated as the rate of input cost rises softened to a one-year low. However, there was additional pass through of higher freight, labour and material costs, leading to some upward revision in output prices, it said.
The easing of input cost pressures also led the business sentiment to strengthen further from a 27-month low in June this year. The degree of optimism was at its highest in six years.
Predictions of stronger sales, new enquiries and marketing efforts boosted confidence in August.
With aggregate output growth and new work orders in manufacturing as well as services, the composite PMI also recorded an expansion from 56.6 in July to 58.2 in August.
Domestic demand conditions are expected to remain favourable amid combination of festive-heavy second half of this fiscal (H2 FY23) and pent-up demand amidst high vaccination coverage, Acuite said in a note.
While the domestic economy appears resilient at this stage, downside risks do remain due to adverse global factors like tightening of global financial conditions, higher interest rates and elevated geopolitical uncertainty. These can constrain external demand significantly in H2 FY23, the Mumbai-based rating agency added.
Fibre2Fashion News Desk (DS)