Although growth more or less remained at a high level, employment decreased further amid Covid-19 restrictions.
On the other hand, strengthening demand for raw materials and semi-finished items exerted upward pressure on input cost inflation, which picked up to a 32-month high.
Factory gate charges also rose, albeit at a modest and softer pace. Robust demand for inputs led suppliers to hike their fees. Survey members noted higher prices for a number of items such as chemicals, metals, plastics and textiles.
Better demand conditions and successful marketing campaigns reportedly underpinned a further increase in new orders in February. The data showed a rise in pre production inventories in February, the sharpest monthly growth in the survey history. However, post-production stocks fell sharply as companies attempted to deliver purchased goods in a timely manner.
Pollyanna De Lima, economics associate director at IHS Markit, said," Still, the data indicated that production growth could have been stronger should firms have appropriate resources to handle their workloads. This was evident from a quicker rise in outstanding business and another decline in inventories of finished goods."
In GDP data, manufacturing came out of contraction seen in the four consecutive quarters by posting a moderate 1.6 per cent growth in the third quarter of 2020-21.
New export orders also rose halfway through the final quarter of fiscal year 2020/21, albeit at a modest rate that was softer than in January.
According to panel members, the Covid-19 pandemic restricted international demand for Indian goods.
Official trade data showed that merchandise exports rose at a hefty pace of 6.16 per cent in January against a marginal 0.14 per cent in December. Most months in 2020 saw contraction in goods' exports.
Goods producers expect output to increase over the coming 12 months, with the overall level of positive sentiment matching that recorded in January. Optimistic growth projections reflected forecasts of an improvement in economic conditions and the lifting of restrictions as the vaccination programme expands.
A fast nationwide vaccine roll out could provide a further boost to activity normalisation, said Barclays India in a note on PMI.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.