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The 5.6 per cent contraction in manufacturing was the worst since August 2020, the Anand Rathi Research said in a report.

The worsening was broad-based yet part of the deterioration was due to transitory factors such as loss of workdays due to festival holidays, the report said, adding that the unfavourable base also played a role.

Simultaneously, as 20 per cent of manufactured production is for exports, lower global demand poses a structural headwind.

Abatement of transitory factors are likely to bring back industrial growth in November 2022. The recovery, however, is likely to be modest.

The report said that at 4 per cent contraction, industrial growth in October this year was the worst since August 2020.

Manufacturing contracted while mining and electricity recorded modest growth rates.

Of the use-based categories, staples and durables registered sharp contractions, and intermediate and capital goods recorded modest de-growth in the month. Primary goods and infra clocked marginal growth rates.

Only six of 23 manufacturing categories recorded growth in October 22. The sharp contraction in manufacturing was to a large extent on account of loss of workdays during the festival holidays, the report said.

Moreover, over 20 per cent of manufactured products are exported and, with a slowdown in global demand, Indian exports are registering sharp contractions.

Also, due to the asymmetric festival season in 2021 and 2022, the base effect in October was unfavourable.

With a slightly favourable base effect and more workdays, we expect modest industrial recovery in November, said the report.

A jump in manufacturing PMI in November 22 vs. October 22 also suggest the same. Yet, the headwinds in exports would continue. Domestic demand too suggests weakness.

The government has accelerated spending since September after a lull in July-August. This should also help to a modest recovery in industrial growth, the report added.