Manufacturing activity in India slowed as the Purchasing Managers’ Index fell to 54.7 in October. S&P Global reported that while growth rates softened, the sector remained in expansion. Pranjul Bhandari said, “India’s manufacturing PMI softened to 54.7 in October from 55.1 in the previous month but remained firmly in expansionary territory.”
Amid festivities, manufacturing activity in India slowed a bit, with the Purchasing Managers’ Index (PMI) dropping to 54.7 in October, S&P Global reported on Monday. However, fresh job creation recorded an increase during the month, albeit at a slower pace.
The data showed mixed trends. While output and new orders rose sharply, growth was at softer rates. Meanwhile, export order growth hit six-month igh and selling price inflation eased to nearly a four-year low.
The PMI is derived based on responses from purchasing executives of 400 companies. Index above 50 means expansion, while below 50 means contraction.
“India’s manufacturing PMI softened to 54.7 in October from 55.1 in the previous month but remained firmly in expansionary territory and above its long-run average,” Pranjul Bhandari, Chief India Economist at HSBC, said. Further she said that strong international demand pushed growth of new export orders to a six-month high, supporting a robust rise in output.
On job creation, the PMI Manufacturing report said that higher production requirements and rising workloads encouraged a second successive monthly increase in factory employment. “The pace of job creation eased, however, and was only slight,” it said, adding that capital goods producers reduced staffing, with growth seen elsewhere.
Meanwhile, cost pressures moderated across all three broad areas of India’s manufacturing industry monitored by the PMI survey. Although survey members reported higher prices for several materials and energy, the overall rate of input cost inflation retreated to its lowest since February. Indian goods producers raised selling prices to protect margins, but the increase was only slight and the weakest in just under four years.
“Producers also increased input inventories to the greatest extent in eight months, building precautionary buffers to mitigate potential shortages and meet rising production requirements amid a volatile global environment. Although some material and energy costs increased, overall input and output price pressures eased slightly from the previous month,” Bhandari said.
According to the survey report, input purchasing growth entered its 64 straight months in October, but the pace of expansion slowed to the weakest over this period. Despite continued demand growth, business confidence slipped from September and remained below its long-run average. “Close to 18 per cent of manufacturers anticipated higher output over the coming year, while the remainder were neutral,” the report said. Further more positive expectations were underpinned by new client enquiries and demand for industrial automation and technology solutions, qualitative data showed.