India’s manufacturing sector continues to remain positive in Purchasing Managers’ Index (PMI) clocked 57.5 in February same as 57.7 in January, a monthly survey said on Monday.

However, employment decreased further amid COVID-19 restrictions related to shifting work, seasonally-adjusted IHS Markit India Manufacturing said in its monthly survey.

The manufacturing sector contributes 15 per cent of the country’s gross domestic product (GDP), which makes it is one of key sources of employment.

“Indian goods producers reported a healthy inflow of new orders in February, a situation that underpinned a further upturn in output and quantity of purchases,” Pollyanna De Lima, Economics Associate Director at IHS Markit, said.

Lima noted that production growth could have been stronger if firms had appropriate resources to handle their workloads. “This was evident from a quicker rise in outstanding business and another decline in inventories of finished goods,” Lima said.

Lima noted that such short restrictions on shift-related works will shortly be removed as the vaccination programme widens.

“Once larger parts of the population are immunised against COVID-19 and restrictions start to be lifted, companies expect a gradual improvement in economic conditions which they hope will translate into output growth,” Lima said.

Meanwhile, goods producers expect output to increase over the coming 12 months. Optimistic growth projections reflected forecasts of an improvement in economic conditions and the lifting of restrictions as the vaccination programme expands, as per the survey.

“The overall degree of business optimism was the joint-highest for three months. The upbeat mood supported the fastest increase in input buying for almost a decade as companies focused on rebuilding their input stocks to fulfil demand growth. February data showed the sharpest monthly rise in pre-production inventories in the survey history,” Lima said.

On the prices front, the survey said strengthening demand for raw materials and semi-finished items exerted upward pressure on input cost inflation, which picked up to a 32-month high. Although factory gate charges also spiked during the months of February, the rate of inflation was slightly better from January’s 13-month high.