Indian factory activity was expanded at the fastest speed in eight months in October on strong demand and increased output, although another surge in the cost of raw materials threw shadows over prospects, a private survey showed.
Monday data referred to the recovery of expanded businesses in the third largest economy in Asia from a pandemic decline and, along with increasing price pressure, can increase the view of The Reserve Bank of India will tighten monetary policy earlier than expected, such as other major central banks.
The manufacturing purchase manager index, compiled by IHS Markit, jumped to 55.9 in October from September 53.7, the highest since February, and remained above the growth that separated 50 from contractions for the fourth consecutive month.
“With the company preparing for further improvement in demand by building their shares, it seems that manufacturing activities will continue to grow throughout the third quarter of Fiscal 2021/22 if the pandemic remains controlled,” Pollyanna de Lima, Director of Economic Associate in IHS Markit, said in the release.
“Optimistic business trust and projects in pipes must also support production in the coming months.” The latest survey shows new sub-index orders, proxies for domestic demand, up to 58.7 months ago, the highest in seven months.
Foreign demand is also expanded at the fastest speed since July, encourages companies to increase output.
However, the company shed work for the third consecutive month.
“Apart from the overall increase in operating conditions, the work failed to increase.
It is often associated with sufficient capacity to deal with current workload and government norms around Shift work,” De Lima said.
Last month, input costs increased at the strongest speed in almost a decade, pressing the manufacturer to forward several loads to customers.
Which shows the overall inflation will continue to increase during the coming year.
The recent surge in global crude oil prices up to $ 85 per barrel also made nervous policy makers and consumers considering India meets more than 80% of its oil needs through imports.
But the RBI was not expected to raise interest rates to at least the beginning of the next financial year, in April-June 2022, a separate Reuters poll showed.