India’s manufacturing output expanded for the first time in five months in August, results of a private survey showed, signalling a turnaround in industrial activity after the government gradually lifted the two-month-long lockdown in June.

Data released by data analytics firm IHS Markit showed purchasing managers’ index (PMI) for manufacturing rose to 52 in August from 46 in July.

A figure above 50 indicates expansion, while a sub-50 print signals contraction.

Shreeya Patel, an economist at IHS Markit, said August data highlighted positive developments in the health of the Indian manufacturing sector, signalling moves towards a recovery from the downturn in the June quarter.

“The pickup in demand from domestic markets gave rise to upturns in production and input buying,” she added.

India’s economy contracted at a record 23.9% in the June quarter of FY21, underlining the extent of economic damage inflicted by the coronavirus pandemic.

However, Patel said not everything was positive in August, with employment continuing to fall despite signs of capacity pressures, as firms struggled to find suitable workers.“The rate of input price inflation was solid, following four monthly declines in cost burdens. Firms, however, continued in their efforts to drive sales amid greater competitive pressure and reduced their selling prices,” she added.

IHS Markit said production growth was largely driven by greater demand for Indian goods following the resumption of business operations, even though the decline in foreign exports weighed on overall new orders as firms cited subdued demand conditions abroad.

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