India's Manufacturing PMI In October Slips To 55.5 On Weak Demand, Lowest In Eight Months

Manufacturing PMI was 57.5 in September. It is the lowest manufacturing PMI since March when the PMI was recorded 55.7

S&P Global said there was a slower increase in total new orders, production, exports, buying levels, and stocks of purchases. ( Image Source :Getty )

Manufacturing activity in India dropped to its lowest in eight months in October, credit rating agency S&P Global’s survey said this on Wednesday. According to the survey, the Manufacturing Purchasing Managers' Index (PMI) slipped to 55.5 in October because of competitive pressure and weak demand. It was 57.5 in September. It is the lowest manufacturing PMI since March when the PMI was recorded 55.7.

The hiring activity and business confidence slipped to a five-month low in October. S&P Global said there was a slower increase in total new orders, production, exports, buying levels, and stocks of purchases. Cost pressures also intensified, while output price inflation receded.

Pollyanna De Lima, economics associate director, S&P Global Market Intelligence, said, "The survey's new orders index slipped to a one-year low, as some firms raised concerns about the current demand picture for their products. Consumer goods were behind most of the slowdown, recording considerably softer increases in sales, production, exports, input inventories and buying levels. Growth of all of the aforementioned variables was led by capital goods makers which, with the exception of new orders, registered accelerated rates of expansion.”

According to agency, less than 4 per cent of firms are hiring extra employees, 95 per cent leaving their headcounts unchanged. The rate of job creation was not much and the slowest since April.

"We saw a further indication of broadly stable inflationary forces across the manufacturing industry. It appears that a moderate increase in input costs was simply passed on to clients," De Lima added.

S&P Global’s survey pointed out that the price trends were also mixed. Both input costs and output charges rose, but inflation of the former accelerated while factory gate charges rose to a weaker extent. When listing materials that had increased in price, firms mentioned aluminium, chemicals, leather, paper, rubber, and steel, the agency stated. The sector, however, continues to expand as a reading of over 50 shows expansion in the sector.