India’s Manufacturing Sector: Strong Resilience Amidst September Shifts

India’s manufacturing sector showed resilience in September, with the S&P Global PMI recording a reading of 57.5, slightly down from August’s 58.6. While this marks a 5-month low, However, it’s important to note that this reading remains firmly above the pivotal mark of 50.0, signalling a robust expansion in the sector. 

PMI above 50 is a sign of expansion in activity, while below 50 indicates contraction. The Manufacturing PMI is a weighted average of five indices: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%).

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New Orders and Export Strength:

One of the key highlights of the report is the substantial rise in new orders, despite a softer pace compared to the previous month. This indicates sustained demand in the market, with factors such as favourable demand trends, positive market dynamics, and effective advertising contributing to this growth. 

Additionally, India’s manufacturing sector continues to benefit from international markets, with new export orders remaining strong, especially from Asia, Europe, North America, and the Middle East.

1- Inflation and Costs:

The report also provides a mixed picture on the cost front. Input price inflation, after reaching a 1 year high in August, moderated to its weakest level in over 3 years. While some input costs, such as copper and electronic components, continued to rise, others, like aluminium and oil, saw reductions.

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2- Optimism Abounds:

Despite the slight slowdown in growth, Indian manufacturers remain optimistic about the future. The report shows that businesses are confident that output volumes will continue to increase over the next 12 months. Buoyant customer demand, effective advertising, and expanded production capacities have all contributed to this positive sentiment.

3- Supply Chain Stability:

One notable aspect of the report is the stability of supply chain conditions. Average delivery times saw only a fractional extension, following a 6-month period of improving vendor performance. This indicates that the capacity of Indian manufacturers and their suppliers remains largely unaffected.

Takeaway: India’s September Manufacturing PMI of 57.5, while slightly lower, signifies a resilient industry with strong new orders, export potential, and business confidence. Moderating input costs and the ability to raise prices reflect the sector’s adaptability and competitiveness. As India charts its economic course, the manufacturing sector stands as a steadfast contributor, offering promise for the nation’s economic growth.

Also Read: Navigating Economic Currents: Core Sector Growth Dips to 7.8% in November, Marking a Six-Month Low