India's manufacturing PMI eases to 56.6 in Nov as tariffs hit export orders

India's manufacturing PMI fell to a nine-month low in November as new orders, export demand and hiring softened, with companies citing tariff pressures and fading GST-related gains

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India’s manufacturing activity continued to expand in November but at a slower pace, with the Manufacturing Purchasing Managers’ Index (PMI) at 56.6, down from 59.2 in October, according to data compiled by S&P Global. The data signalled the weakest improvement in operating conditions in nine months since February.

 

The overall growth remained strong, with the index staying well above the neutral mark. A reading above 50 indicates economic expansion, while one below 50 shows contraction in the manufacturing or construction sectors. A reading of exactly 50 signifies no change.

New orders weakest since Feb

Total new orders and output continued to grow at above-trend rates but at their weakest pace in nine months. While new business growth and efficiency gains supported an increase among some firms, others suggested that subdued demand constrained output levels.

 

Pranjul Bhandari, chief India economist at HSBC, noted: “India’s final November PMI confirmed that US tariffs caused the manufacturing expansion to slow. The new export orders PMI fell to a 13-month low. Business confidence, as indicated by expectations for future output, showed a big fall in November, potentially reflecting increasing concerns about the impact of tariffs. The boost from the cuts in goods and services tax (GST) may be fading, and it might be insufficient to offset the tariff headwind to demand.”

Export orders remain muted

Export order growth also softened, rising at the slowest rate in over a year. However, the sector enjoyed strong demand from Africa, Asia, Europe and the Middle East.

Job creation at 21-month low

With new orders rising slowly, manufacturers cut back on hiring and purchases. Job growth was the weakest in nearly two years, even though employment has been increasing at a softer pace for 21 consecutive months.

 

Cost pressures remained mild in November. Input prices rose at their slowest pace since February, which allowed companies to keep selling price increases to a minimum. The rise in output charges fell to an eight-month low.

Forward outlook

Companies remained confident of a rise in output next year, but positive sentiment fell to its lowest level in nearly three-and-a-half years. According to S&P, the downgraded forecasts stemmed from concerns around a competitive landscape, including competition from international firms.