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Indian manufacturing activity eases marginally in month of February

New export orders also rose halfway through the final quarter of fiscal year 2020/21, albeit at a modest rate that was softer than in January

Indian manufacturing activity eased marginally in the month of February but it remains above the boom-or-bust line of 50 that separates expansion from contraction, as firms responded to strong increases in new work intakes by lifting production, input buying and stocks of purchases. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - stood at 57.5 in February as against 57.7 in January.

The report further said that better demand conditions and successful marketing campaigns reportedly underpinned a further increase in new orders during February. Although easing from January, the pace of growth remained sharp in the context of historical data. New export orders also rose halfway through the final quarter of fiscal year 2020/21, albeit at a modest rate that was softer than in January. Besides, payroll numbers fell further amid the observance of government guidelines aimed at halting the spread of COVID-19 by implementing shift work. The decline was the eleventh in successive months.

On the inflation front, strengthening demand for raw materials and semi-finished items exerted upward pressure on input cost inflation, which picked up to a 32-month high. Factory gate charges also rose, albeit at a modest and softer pace. Meanwhile, goods producers expect output to increase over the coming 12 months, with the overall level of positive sentiment matching that recorded in January. Optimistic growth projections reflected forecasts of an improvement in economic conditions and the lifting of restrictions as the vaccination programme expands.