Indian manufacturing sector resumes growth in October: PMI index

Latest update:November 04, 2024 11:31 AM EST

Manufacturing growth in India recovered due to faster growth in total new orders and international sales.

In PMI parlance, a value above 50 means expansion, and a value below 50 means contraction. (Representative image)

India’s manufacturing sector growth rebounded from an eight-month low in September to 57.5 in October, helped by faster growth in total new orders and international sales, a monthly survey said on Monday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from September’s eight-month low of 56.5 to 57.5 in October, indicating a significant and accelerated improvement in manufacturing conditions.

In PMI parlance, a value above 50 means expansion, and a value below 50 means contraction.

“India’s headline manufacturing PMI rose significantly in October as economic conditions continue to improve overall. The rapid increase in new orders and international sales reflects strong demand growth in the Indian manufacturing sector,” said Pranjul Bhandari, chief India economist at HSBC.

The growth in indicators was facilitated by growing demand for Indian goods. Moreover, new product introductions and successful marketing initiatives have helped improve sales performance.

New export orders also showed stronger growth, following the weakest growth in a year and a half in September. Commissioners reported an increase in the number of new contracts from Asia, Europe, Latin America and the United States.

On the price front, October data signaled rising inflation pressures in India’s manufacturing sector.

Product manufacturers were also more willing to hire additional staff, which, coupled with rising material costs, led to higher business expenses. Both production prices and selling costs grew at a faster rate.

“Raw materials and product prices are rising as a result of persistent inflationary pressure on materials, labor and transportation costs,” Bhandari added.

On the employment front, manufacturers not only hired additional staff at the start of the fiscal third quarter, but they also hired more than they did in September. About one in 10 panelists reported an increase in employment, while 1 percent reported job losses.

Subsequently, Indian producers became more optimistic about future production volumes.

“Business confidence is also very high at the start of the fiscal third quarter due to expectations of continued strong consumer demand, new product launches and sales pending approvals,” Bhandari said.

The HSBC India Manufacturing PMI is compiled by S&P Global based on responses to questionnaires sent to purchasing managers from a group of about 400 manufacturers.

(This story has not been edited by News18 staff and is published from a syndicated news agency – PTI feed)