The country's manufacturing sector is likely to witness a rise in hiring activity in the last three months of this year due to an expected increase in demand, says a report by Japanese securities firm Nomura.
According to the research note by Nomura, the industrial sector would become a "net hirer" in the fourth quarter of 2009, after sharp job cuts in first six months of the year.
"All industries, except textiles, are expected to increase their employment levels in the fourth quarter. Weak export demand continues to weigh on textiles, but other sectors will be net hirers due to an expected increase in demand," Nomura analyst Sonal Varma said in the report.
In Reserve Bank of India's recent industrial outlook survey, a net 8.8 per cent of firms surveyed expected to increase employment in Q4, which was a sharp improvement from negative 5.1 per cent in Q2 when a larger net share of firms expected to reduce, rather than increase, employment.
The Nomura report pointed out that at 8.8 per cent in the fourth quarter, the 'net response' on employment is still below the peak of around 18-20 per cent seen in early 2008, but it was comparable to employment conditions in late 2005.
Further, an improving employment outlook bodes well for private consumption demand in days ahead and may partly offset drag from lower rural demand this fiscal year, Nomura added.
"Improved employment conditions would also help lay a solid foundation for sustainable consumption demand," it said.