India's Nikkei Manufacturing Purchasing Managers' Index fell 50.7 in October

India's Nikkei Manufacturing Purchasing Managers' Index fell 50.7 in October from 51.2 in the previous month, showed the survey data from Markit Economics. The latest PMI dataset highlighted weaker growth of both output and new orders. Encouragingly, companies added to their workforces for the first time since January and continued to increase buying levels. On the price front, both input costs and factory gate charges rose, albeit at rates that were below their respective long-run averages.

Nonetheless, the PMI has recorded above the crucial 50.0 threshold in each month since November 2013. Output growth eased in October on the back of a slower increase in new orders. Rates of expansion in both production and order books were the weakest in their current 24-month sequences of growth, with panellists reporting challenging economic conditions and a reluctance among clients to commit to new projects. Sector data indicated that consumer goods was the best performing category in October, while improving operating conditions were also seen in the intermediate goods sub-sector. Conversely, capital goods firms saw business conditions deteriorate in the latest month as output and new orders declined for the first time since September 2014 and August 2014 respectively. New business from abroad placed with Indian manufacturers rose for the twenty-fifth straight month in October. However, growth was little changed from the marginal pace seen in September.

Despite the slowdown in new order growth, manufacturers hired additional workers in October. Employment rose for the first time since January, although only marginally. Those companies reporting higher staffing levels commented on expectations of a pick up in demand in coming months. October saw inflationary pressures return to India's manufacturing economy. Average purchase costs rose, amid reports of higher metal, paper and food prices. The rate of increase was, however, only slight in the context of historical data. Part of the additional cost burden was passed on to clients as tariffs were raised. Nonetheless, the rate of charge inflation was marginal overall. Buying levels rose for the twenty-fourth consecutive month in October, although at the weakest pace since December 2013. Meanwhile, stocks of purchases were broadly unchanged whereas holdings of finished goods fell further.

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