India's manufacturing sector rebounds in August

Adjust Comment Print

Britain's manufacturers saw growth surge in August as new orders from both the United States of America and Europe flooded into the country and supported the sector, according to the latest PMI reading from IHS Markit.

"Today's official PMI readings suggest that industrial output defied a slowdown in the broader economy last month", Julian Evans-Pritchard of Capital Economics said in a note.

Production advanced at the steepest pace in seven months in August, driven by faster intakes of new work received.

Manufacturing output declined to 54.3 from 56.3, though some survey respondents reported having a greater number of projects in the pipeline.

Furthermore, the rate of growth was little changed from July's five-month high.

A private sector survey confirmed earlier data pointing to a pick-up in Chinese manufacturing in August, but some economists remained unconvinced about the staying power of the upturn.

The PMI report said activity rose to its second-highest level in more than three years, as production picked up pace despite overseas demand for British goods easing from a near-record high in July.

Higher demand forced firms to raise their staff numbers in August and the rate of job creation was the most marked in over seventeen-and-a-half years. Following the GST launch, new orders and output dropped for the first time since the downturn in December a year ago post demonetisation.

According to the Markit survey, purchase price inflation accelerated for the first time in seven months during August, with over a third of companies reporting rising purchase prices.

A subdued economic outlook pushed the Reserve Bank of India to cut its interest rates by 25 basis points in August, but the central bank maintained its neutral stance and said inflation data would drive its future policy moves. This was highlighted by the sharpest increase in export sales since March 2010.

"The manufacturing economy remains in good health despite Brexit uncertainty", said Rob Dobson, director at IHS Markit.