Business & Investment

Manufacturing PMI returned to extended mode at 55.3 in July

After unlocking Covid-19 nationwide, reaffirming the ongoing economic recovery in the country, the manufacturing PMI in July 2021 reached a high of 55.3 in three months compared to 48.1 in June. did.

Another good news about the latest July printed matter is that companies hired new hires after a gap of almost 15 months.

The manufacturing industry has a gross value added (GVA) share of over 14%.

Recall that the Manufacturing Purchasing Managers Index, created by IHS Markit, shrank in June for the first time in 11 months. “India’s operational conditions improved in July after growth stopped due to a pandemic expansion in June,” the agency said.

Get the economy back on track

The index fluctuates between 0 and 100, with above 50 expanding overall compared to the previous month and below 50 decreasing overall.

“Production is growing at a steady pace, with more than one-third of companies looking to expand their monthly production amid a recovery in new businesses and some deregulation of local Covid-19. We expect industrial production to increase by 9.7% annually in 2021 if

PMI data is released monthly prior to equivalent official economic data. It is edited from the responses to a survey sent to the purchasing manager on a panel of about 400 manufacturers.

How to start economic activity

The diffusion index is calculated for each survey variable. The index is the sum of the percentage of “higher” responses and half the percentage of “unchanged” responses. The heading PMI is a weighted average of five indicators: new order (30%), production (25%), employment (20%), supplier delivery (15%), and purchased inventory (10%). percent).

Good news in terms of work

One of the notable results of the survey is work development. “Manufacturers hired additional workers in July in parallel with sales growth and rising production requirements. Employment growth was modest, but ended a series of 15 months of dismissals.” Stated.

De Lima pointed out positive progress, but was less confident about the continued additions. “Although it was a small increase in employment, it was the first time since the launch of Covid-19. However, this trend will continue as the cost burden of companies continues to increase and the signs of surplus capacity are still clear. It can’t be said that it will last for months, “she said.

Authorities also said the company had purchased additional inputs for use in the production process. “Purchase prices rose even further as demand for inputs exceeded supply. Cost inflation remained above the long-term average, but eased to a seven-month low,” he said.

Delima said policymakers welcome evidence that inflationary pressures are beginning to weaken. Companies have shown that input costs and production costs increase the slowest in seven months. Therefore, “RBI continues to support growth and expects to keep interest rates unchanged at the August meeting,” he said.

Manufacturing PMI returned to extended mode at 55.3 in July Manufacturing PMI returned to extended mode at 55.3 in July

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