Manufacturing PMI dips in October as output, orders see slow growth

HSBC's India Manufacturing PMI fell to 54.7 from 55.1 in September, even as export orders grew at their fastest pace in six months and input cost inflation eased

India’s manufacturing activity expanded at a slower pace in October after recovering in September, as growth in output and new orders moderated, a private survey showed on Monday.

 

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), which tracks monthly changes in manufacturing activity, fell to 54.7 in October from 55.1 in September.

 

The October reading, based on a weighted average of new orders, output, employment, suppliers’ delivery times and stocks of purchases, was slightly below the flash India Manufacturing PMI estimate of 54.9 released last month.

 

The index remained above the 50-point mark, indicating an expansion in activity, while a reading below 50 signals contraction. October marked the 60th consecutive month of expansion.

 

“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. Strong international demand pushed growth of new export orders to a six-month high, supporting a robust rise in output,” said Pranjul Bhandari, chief India economist at HSBC.

 

Growth in new domestic business eased from September’s seven-month high, while new export orders rose at their fastest pace in six months. “Companies reported gains from a broad range of destinations, including Bangladesh, Canada, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka, the UK, US and UAE,” the survey said.

 

Output continued to rise sharply, but the pace of growth slowed from September, driven by a moderation among intermediate goods manufacturers, the survey said.

 

Meanwhile, cost pressures eased across all three broad segments of India’s manufacturing industry tracked 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,” S&P Global said.

 

Factory employment also increased in October as production requirements and workloads rose. However, the pace of job creation slowed from previous months, while employment in the capital goods category declined.

 

“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 added.