The hiring trends in the manufacturing sector are improving after a long gap. FICCI’s latest quarterly survey on the manufacturing sector reveals that after experiencing a revival of Indian manufacturing in the first three quarters of 2021-22, the momentum of growth continued in subsequent quarters of Q4FY22 and Q1FY23.
The automotive sector is forecast to show moderate growth during the Q1FY23 compared with Q1FY22. It had utilised 80% of its manufacturing capability during Q4FY22.
The survey noted that 54.8% of respondents reported higher production levels in Q1FY23, with an average expectation of an increase in production by over 10%. This is slightly more than the percentage of respondents experiencing higher growth in Q1 last year. Also, the FICCI survey observed that there seems to be an improvement in employment creation by the sector compared to the previous quarter (Q3FY22, where only 25% of the respondents were looking at hiring in the next few months.
This percentage has improved significantly to 53% of the respondents in Q1FY23 who are now looking at hiring an additional workforce in the next three months. The survey noted that this assessment is also reflected in order books as 55% of the respondents in Q1FY23 are expecting a higher number of orders.
FICCI’s latest quarterly survey assessed manufacturers' sentiments for Q1FY23 for twelve major sectors, namely Automotive, Capital Goods, Cement, Chemicals, Fertilisers and Pharmaceuticals, Footwear, Machine Tools, Metal & Metal Products, Paper Products, Textiles, Toys, Tyre and others.
The existing average capacity utilisation for Q4FY22 in manufacturing is 77%, a little higher than 75% in the previous quarter, reflecting increased economic activity in the sector. The future investment outlook also improved compared to previous quarters but remains cautious optimism, as 40% of respondents reported plans for capacity additions in the next six months, by 14% on an average.
Global economic uncertainty caused by the Russia-Ukraine War and increasing cases of COVID worldwide have accentuated the volatilities impacting the major economies.
High raw material prices, increased cost of finance, cumbersome regulations and clearances, shortage of working capital, high logistics costs due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacities due to a high volume of cheap imports into India, unstable market, high power tariff, shortage of skilled labour, highly volatile prices of certain metals etc. and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents, the report noted.