The country’s manufacturing activity expanded at its fastest pace this fiscal in September as the economy opened up after the nationwide lockdown. Demand and output both rose even as layoffs continued, a survey showed.

The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) increased from 52.0 in August to 56.8 in September. The index was at its highest since January 2012.

“Manufacturing continued to move in the right direction, with PMI data for September highlighting many positives. After restrictions were lifted, factories went full steam ahead for production, supported by a surge in new work,” Pollyanna de Lima, economics associate director at IHS Markit, said.

In April, the index had slipped into contraction mode after remaining positive for 32 consecutive months. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

“The jump in September’s manufacturing PMI reading to its highest in over eight years is a much-needed sign that the recovery is on. But with India now a virus epicentre, containment measures are likely to remain in place for a long time yet, which will dampen manufacturing prospects,” Darren Aw, Asia economist, Capital Economics, said.

“The figures suggest that activity and sentiment have improved in September 2020 ... a fragmented recovery is underway. We expect the contraction in GDP to narrow to 12.4 per cent in the second quarter of 2021,” Aditi Nayar, principal economist of Icra, said.