The manufacturing outlook has improved slightly in the manufacturing sector but the sentiment still remains weak. This has been revealed in the survey of FICCI. The latest quarterly survey of July-September 2020 revealed that 80% of the companies are not in the mood to hire an additional workforce in the next three months.
There is a slight improvement in the present time on hiring as compared to the first quarter of FY 2020-21. In the April-June quarter, 85% of the companies said they were not in favor of hiring an additional workforce. According to the survey, there has been a slight recovery in the manufacturing sector in the July-September quarter compared to the first quarter.
24% of companies accept more production
According to the survey, 24% of the manufacturing sector respondents accepted higher production in the second quarter. In comparison, only 10% of respondents in the first quarter admitted to overproduction. 74% of the respondents accepted low or equal production in the second quarter. This was accepted by 90% of the respondents in the first quarter.
65% of companies are using their full capacity
65% of companies are using their full capacity in the second quarter of the current financial year. It has improved after two consecutive quarters. In the first quarter of the current financial year, production was almost at a standstill in companies making products other than essential commodities. At the same time, companies used 61.5% of their capacity in the first quarter of FY 2020.
Fall in future investment outlook
According to the survey, the Future Investment Outlook declined in the second quarter. Only 18% of respondents said they would invest in the next 6 months for capacity expansion. In the last quarter, 22% of respondents said about future investment. However, higher raw material prices, higher finance costs, lower-skill labor and working capital, higher logistics costs, reduced domestic and global demand are other factors that are hampering the expansion of the manufacturing business.
Exports increased in the second quarter
24% of the respondents surveyed said that there was an increase in exports in the second quarter of 2020-21. Whereas only 8% of the respondents in the first quarter admitted the increase in exports. 19% of the respondents said that this year exports will remain at the same level as last year. However, manufacturers paid interest at an average of 9.2% in the second quarter. Interest was paid at an average rate of 9.4% in the previous quarter. The survey recorded the highest interest rate of 12.5%. 55% of the respondents said that interest rates have come down due to continuous cut in repo rate by RBI.