The Indian economy is showing signs of recovery as factory jobs soared in July

Indian economy showed signs of recovery in July as factory jobs increased after growing domestic and foreign demand. Industrial recovery has forced companies to create new jobs after the second deadly wave of the Covid-19 epidemic disrupted the economy.

The Manufacturing Purchasing Managers ’Index (PMI), compiled by IHS Market, jumped 55.3 in July from 48.1 in June. It can be noted that anything above the 50 level is considered maturity.

A IHS Market study has confirmed that output has risen sharply, with more than one-third of companies noticing a monthly increase in production as business returns and Covid bans soften.

“Outflows have risen sharply, with more than a third of companies seeing a month-long increase in production, amid new business downturns and a reduction in some local COVID-19 limits,” said Pollyanna De Lima, IHS Umaki’s economic director.

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The return to factory work comes after the second deadly Covid-19 wave in April and May. The collapse of active Covid-19 lawsuits led to a significant reduction in restrictions in July, allowing businesses to tighten production operations.
At a time when manufacturing production is booming, concerns remain with the third flu epidemic as the country reports more than 40,000 cases a day. Even with them, the economic recovery has led to high demand and sales.
Exports have also proven to be a healthy increase as orders have grown at a faster rate since April. Jobs have also risen for the first time since March 20, breaking a 15-month strike. However, the employment rate remains low and the labor crisis in the country is far from over.

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Economic recovery after the second wave could lose momentum if the country could see another round of Covid explosions. Cases are already on the rise in a number of provinces, prompting experts to warn of a third wave in the country.

Rising inflation is another major obstacle to the recovery process. A recent study by the news agency Reuters shows another increase in inflation due to higher fuel prices.

Meanwhile, the lack of access to raw materials and the high cost of goods are likely to drive installation costs very high. While companies seem to take on the burden of import costs in order to stay competitive, a further increase in production costs could force them to increase consumer prices.
“As the cost burden of firms continues to rise, but signs of inability to save are still visible, it is too early to say that such a situation will be maintained in the coming months,” De Lima said.

Due to the uncertain economic situation, the Reserve Bank of India is unlikely to change the key interest rates in the monetary policy review that comes out every two months this week.

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