Indian factory activity expanded at a slower pace last month as ongoing pandemic-related weakness weighed on demand and production, forcing companies to cut jobs again after a brief recovery in July, a private company said on Wednesday. survey. Data from Tuesday showed that Asia’s third-largest economy grew at a record annual rate of 20.1 percent in the past quarter, driven by a surge in manufacturing and a strong recovery in consumer spending, as well as an increase in infections. due to the Delta variant of the coronavirus and low vaccination coverage. in some states, growth is likely to hurt.
The Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, fell from a three-month high in July of 55.3 to 52.3 in August, but remained above the 50 level separating monthly growth and contraction. a second month, growth slowed sharply in August.
“In August, India’s manufacturing sector continued to recover, but growth lost momentum as demand showed some signs of weakness due to the pandemic,” said Pollyanna De Lima, associate director of economics at IHS Markit. “Uncertainty about growth prospects, spare capacity and efforts to contain spending led to a staff freeze in August.”
Employment fell back into contraction territory in August after growing for the first time in 16 months in July, suggesting that the labor market is still a long way from pre-pandemic levels. Commodity shortages and higher freight costs continued to weigh on input costs, forcing companies to raise prices at the fastest pace since May, signaling inflation would remain high.
However, this was not expected to prompt the Reserve Bank of India to tighten monetary policy, as support for economic growth remains the central bank’s top priority. Still, optimism weakened in August as businesses worried about inflation and the ongoing impact of the pandemic.
“The 12-month manufacturing outlook remained positive, although confidence faded amid concerns about the lingering scars of the pandemic and the negative impact of rising costs,” added De Lima.