| September data revealed a mild setback in manufacturing growth across India. For the third straight month, rates of expansion in factory production and sales receded, both of which were at their weakest since the turn of the year but above their respective long-run averages.
Notably, international orders rose at the slowest pace in a year-and-a-half. Despite this loss of growth momentum, net employment and quantities of purchases rose, while business confidence was broadly aligned with its long-run average.
On the price front, there were moderate increases in input costs and selling charges.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in August to 56.5 in September, highlighting a robust improvement in the health of the sector that was nonetheless the weakest since January.
With manufacturing growth softening throughout the second fiscal quarter, the average PMI reading slipped to its lowest since the three months to December 2023.
Positive demand trends, successful advertising and favourable client interest featured as the main determinants of sales growth among the qualitative part of the survey.
Another factor that constrained total sales growth was a softer increase in new export orders. Factories continued to produce goods at a robust pace that outpaced the long-run series average.
As a result of rising purchasing prices, as well as greater labour costs and favourable demand conditions, Indian manufacturers lifted their charges in September.
Hiring growth also receded in September, reflecting a reduction in the number of part-time and temporary workers at some firms.
The combination of job creation and slower increases in new business meant that companies were able to stay on top of their workloads.
Around 23% of Indian manufacturers forecast output growth in the year ahead, while the remaining firms predict no change. Hence, the overall level of business confidence fell to its lowest since April 2023. |