India's Manufacturing Growth Slows In November, PMI Dips To 56.5

The drop follows a temporary boost during the festival season in October, which had bolstered manufacturing momentum

The pace of expansion was the second-slowest in 11 months, ahead of September's, as manufacturers faced challenges from stiff competition and rising price pressures.

Source : FreePik

India's manufacturing activity eased in November, with the Purchasing Managers' Index (PMI) slipping to 56.5 from 57.5 in October, according to data released on December 2. This marks the joint lowest PMI value in 11 months, matching September's figure.

According to the HSBC final India Manufacturing PMI, compiled by S&P Global, the drop follows a temporary boost during the festival season in October, which had bolstered manufacturing momentum. November's figures indicate a slower, though still robust, rise in new business orders. The pace of expansion was the second-slowest in 11 months, ahead of September's, as manufacturers faced challenges from stiff competition and rising price pressures.

Growth in manufacturing was supported by favourable demand conditions, but escalating input costs weighed on performance. Inflation in input prices reached its highest point since July, driven by increases in the cost of chemicals, cotton, leather, and rubber. Despite this, input price inflation remained below its long-term average.

While rising costs curbed domestic sales to some extent, new export orders gained momentum, reaching a four-month high, underscoring strong international demand.

The HSBC India Manufacturing PMI, a seasonally adjusted indicator of the manufacturing sector’s health, remained above the 55-mark for the 11th consecutive month, signaling continued expansion.

Pranjul Bhandari, Chief India Economist at HSBC, commented on the findings: "India recorded a 56.5 manufacturing PMI in November, down slightly from October but still firmly within expansionary territory. Strong, broad-based international demand, evidenced by a four-month high in new export orders, fuelled the sector's growth. However, output expansion is decelerating as price pressures intensify."

He also noted that input costs for intermediate goods, including chemicals, cotton, leather, and rubber, rose in November. The rise in labour and transportation costs further drove output prices to an 11-year high, as these increases were passed on to consumers.

While manufacturing remains on a growth trajectory, the sector faces headwinds from inflationary pressures and fierce competition, potentially tempering its expansion in the coming months.