Indian factories hit the jackpot in July, hiring picks up pace
A skilled worker working on a lathe machine in his workshop at Anand Parbat Industrial Area during the unlocking process, as construction activities and factories resume. Employment rose for the first time since March 2020, breaking a 15-month chain of job shedding.Courtesy: Reuters

Indian factories hit the jackpot in July, hiring picks up pace

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The Manufacturing Purchasing Managers' Index, compiled by IHS Markit, jumped to 55.3 last month from 48.1 in June, well above 50-level separating growth from contraction.

Factory activity in India bounced back in July as demand surged both at home and abroad, prompting companies to create new jobs for the first time since the onset of the pandemic, a private sector survey has shown, according to Reuters.

The Manufacturing Purchasing Managers' Index, compiled by IHS Markit, jumped to 55.3 last month from 48.1 in June, well above 50-level separating growth from contraction.

Last week, India Global Business had analysed the uptick in India’s corporate sector while assessing that the creditworthiness of Indian companies as well as their profitability have improved sharply in the April-June quarter of 2021, indicating that the corporate sector could be heading for a sustainable revival over the rest of the year. The data from seven credit rating agencies showed these firms upgraded 771 companies in the April-June quarter and downgraded 370, giving a healthy credit ratio of 2.08 for the three-month period.

According to Pollyanna De Lima, economics associate director at IHS Markit who was speaking to Reuters, "Output rose at a robust pace, with over one-third of companies noting a monthly expansion in production, amid a rebound in new business and the easing of some local COVID-19 restrictions.”

Export orders grow

New export orders grew at the fastest rate since April.

Employment rose for the first time since March 2020, breaking a 15-month chain of job shedding. However, the pace of hiring was mild given the stresses imposed by the pandemic indicating that a job crisis was not entirely ruled out.

India grappled with a devastating second wave of coronavirus infections in April and May but falling case numbers have allowed many restrictions to be eased.

The country is still reporting more than 40,000 cases per day, taking the total number of infections to around 31.6 million, but the economic re-opening induced higher demand and sales, leading to a sharp expansion in output.

Growth in Asia's third-largest economy could lose momentum, with new coronavirus variants posing the biggest risk to already weakened forecasts, while inflation was expected to rise, a recent Reuters poll showed.

Supply bottlenecks (in China) remain a constraint. But the PMIs suggest demand is cooling too, taking the heat out of price gains and weighing on activity in industry and construction.
- Julian Evans-Pritchard, China economist at Capital Economics

India reported 41,831 new COVID-19 cases in the last 24 hours, according to government data last Sunday. The nationwide tally of infections has reached 31.65 million since the start of the pandemic, according to the health ministry. The country reported 541 deaths overnight, taking the overall tally to 424,351 fatalities, data showed.

Women laborers make aluminium-made cooking appliances in a village factory. Manufacturing activity rose in export powerhouses Japan and South Korea though firms suffered from supply chain disruptions and raw material shortages that pushed up costs.
Women laborers make aluminium-made cooking appliances in a village factory. Manufacturing activity rose in export powerhouses Japan and South Korea though firms suffered from supply chain disruptions and raw material shortages that pushed up costs.Courtesy: ANI

Asian factories find the going tough

Elsewhere, Asia's factories hit a rough patch in July as rising input costs and a new wave of coronavirus infections overshadowed solid global demand, highlighting the fragile nature of the region's recovery.

Manufacturing activity rose in export powerhouses Japan and South Korea, though firms suffered from supply chain disruptions and raw material shortages that pushed up costs.

China's factory activity growth slipped sharply in July as demand contracted for the first time in over a year, a private survey showed, broadly aligning with an official survey released last Saturday showing a slowdown in activity.

"Supply bottlenecks remain a constraint. But the PMIs suggest demand is cooling too, taking the heat out of price gains and weighing on activity in industry and construction," said Julian Evans-Pritchard, senior China economist at Capital Economics.

Indonesia, Vietnam and Malaysia saw factory activity shrink in July due to a resurgence in infections and stricter COVID-19 restrictions, according to private surveys.

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