India's manufacturing activity declined five month-low in September on falling numbers of new orders, according to S&P Global. The manufacturing Purchasing Managers' Index (PMI) for India dropped to 57.5 in September, the lowest since May. In August, the PMI was 58.6.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said, "India's manufacturing industry showed mild signs of a slowdown in September, primarily due to a softer increase in new orders which tempered production growth. Nevertheless, both demand and output saw significant upticks, and firms also noted gains in new business from clients across Asia, Europe, North America and the Middle East.
According to S&P Global, goods producers in the country noted a mild slowdown in growth during September. However, a sharp rise in new orders underpinned sustained expansions in output, input purchasing and employment. S&P Global said that while robust demand supported the production growth, it also added to price pressures. "The solid increase in output charges signalled by the PMI data, which occurred in spite of a notable retreat in cost pressures, could restrict sales in the coming months," De Lima added.
According to the latest PMI report, new orders, the largest sub-component, grew at a slightly slower pace in September. Nonetheless, the increase still remains sharp and historically strong. The survey participants cited favourable demand trends, positive market dynamics, and fruitful advertising as reasons for the expansion in sales.
Recent data indicates a reduction in the surge of costs that Indian goods producers faced. The inflation rate, which had reached a one-year high in August, has now decreased to its lowest point in over three years. Panellists have indicated that they are paying more for copper, electronic components, foodstuff, iron, and steel, but they also noted lower costs for aluminium and oil.
Although the lowest for five months, the latest reading remained firmly above the no-change mark of 50.0 and its long-run average (53.9), therefore signalling a sharp rate of expansion, S&P Global said in its release.