India’s Manufacturing PMI in October: Signs of Slowing Growth

In October, India’s manufacturing sector continued to experience expansion, marking the 28th consecutive month of growth. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) came in at 55.5. While this reading is above the crucial 50-point threshold, which indicates expansion (versus contraction below 50), it’s essential to note that it is the lowest in eight months, signaling a slowdown in the sector’s momentum.

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India's October Manufacturing PMI slip Key Insights 

Several key insights emerge from the October PMI data:

Output and Growth: Despite a positive trend in output for over two years, the rate of growth slipped to an eight-month low. Manufacturers attributed this to competitive pressures and weak demand at some plants, particularly in the consumer goods sub-sector.

New Orders: While there was an increase in new orders, the growth rate slowed compared to the previous month. Factors like subdued demand for specific products and fierce competition contributed to the deceleration. The rate of expansion in this category was the weakest in a year.

International Sales: International sales, although still strong, lost some momentum in October. The rise in foreign orders was the weakest in four months. Firms that reported increased foreign orders cited gains from Asia, Europe, the Middle East, and the US.

Employment: While new business continued to drive recruitment efforts among goods producers, the rate of job creation was slight. Fewer than 4% of companies hired additional staff, marking the slowest pace of job creation since April.

Inventory and Supply Chain: Manufacturers maintained sufficient capacity levels, with backlogs of work remaining stable. Suppliers delivered inputs in a timely manner, contributing to stability in vendor performance. Manufacturers purchased additional materials to meet production schedules, with the rate of input buying growth being sharp but the slowest in eight months.

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  • Price Trends: The data revealed mixed trends in prices. Both input costs and output charges increased, with input inflation accelerating, while factory gate charges rose to a lesser extent. Materials such as aluminum, chemicals, leather, paper, rubber, and steel were cited as contributors to rising costs.
  • Business Sentiment: While business sentiment remained in positive territory, it slipped to a five-month low in October. Concerns regarding the path for inflation and demand were noted as influencing this dip. Despite this, optimism persists in the sector.

Takeaway: India’s manufacturing sector continues to expand, as indicated by the PMI above the 50-point threshold. However, the October reading of 55.5 is the lowest in eight months, signaling a slowdown in growth. Challenges such as subdued demand, competitive pressures, and rising input costs are impacting the sector’s performance. It is vital to closely monitor these factors, as they can have broader implications for India’s economic outlook. As we move forward, the resilience of the manufacturing sector and its ability to navigate these challenges will play a crucial role in India’s economic trajectory.

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