India's Manufacturing PMI: India's manufacturing sector recorded a softening in growth throughout the second fiscal quarter of the year. The HSBC India Manufacturing PMI slipped to 56.5 in September from 57.5 in August. 


The average PMI reading of the sector fell to its lowest seen since the three months to December 2023. The survey, compiled by S&P Global, however showed that the sector clocked a strong improvement in overall health. 


The September data indicated that for the third consecutive month, the manufacturing sector logged a decline in growth of factory production and sales. Both the figures managed to remain above their long-run averages even as they stood at their weakest since the turn of the year. Meanwhile, the international orders grew at the slowest pace seen in a year-and-a half.


At the same time, the quantities of purchase increased. Net employment in the sector also rose. The overall business confidence declined to its lowest since April 2023.


Deterrants To Growth


The survey found that the growth of sales in the sector was obstructed by fierce competition. Further, a muted rise in new export orders also dampened the growth. While the factories continued to manufacture goods at a strong pace, growth remained muted in the consumer and capital goods segments. The overall expansion rate slowed down to an eight-month low. 


Cost pressures also increased in September, with panellists pointing out elevated chemical, packaging, plastic, and metal prices. However, inflation rate remained mild in historical terms.


Also Read : Commercial LPG Cylinder Rates Go Up By Rs 48, No Change In Domestic Prices


Economist's Comments


Pranjul Bhandari, Chief India Economist, HSBC, noted, “Momentum in India’s manufacturing sector softened in September from the very strong growth in the summer months. Output and new orders grew at a slower pace, and the deceleration in export demand growth was especially evident as the new export orders PMI was the lowest since March 2023. Input prices rose at a faster rate in September while factory gate price inflation eased, intensifying the compression on manufacturers’ margin. Weaker profit growth might have an impact on companies’ hiring demand, as the pace of employment growth slowed for a third month.”