India’s manufacturing sector showed positive momentum in October, as indicated by the HSBC India Manufacturing Purchasing Managers’ Index (PMI), which increased to 57.5 from September’s eight-month low of 56.5. The data, released by S&P Global, reflects a rebound in demand for goods. The seasonally adjusted PMI, based on responses from approximately 400 manufacturers, slightly exceeded the preliminary PMI of 57.4 published last week. Pranjul Bhandari, Chief India Economist at HSBC, noted that the rise in the manufacturing PMI highlights improving operating conditions within the economy, driven by expanding new orders and international sales, indicating strong demand for Indian manufactured goods.
The increase in order book volumes surpassed the average observed in nearly two decades of data collection, remaining above the long-term average of 54 and the key threshold of 50, which signifies expansion. Notably, new export orders recovered from a year-and-a-half low recorded in September, and output increased, particularly in the consumer and investment goods sectors. Inflationary pressures were also evident, with input prices rising to a three-month high. In response to the increased demand, manufacturers boosted their workforce, with hiring rates in October surpassing those of September. Approximately 10% of surveyed businesses reported hiring additional staff, while only 1% reduced their workforce.
To accommodate the growing demand, companies increased their preproduction inventories, supported by shorter delivery delays from suppliers. This inventory accumulation in October was among the most significant observed in close to 20 years of data collection. Bhandari commented on the rising input and output prices, attributing the increase to persistent inflationary pressures affecting materials, labor, and transportation costs. Business confidence remains high at the start of the third fiscal quarter, fueled by expectations of robust consumer demand, new product launches, and pending sales approvals. The composite PMI, which combines data from both manufacturing and services sectors, along with the HSBC services PMI, will be published on November 6.
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