The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index fell from 57.5 in August to 56.5 in September, highlighting a robust improvement in the health of the sector that was still the weakest since January. With manufacturing growth softening throughout the second 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. The upturn, which was substantial but the slowest in 2024 so far, was reportedly curbed by fierce competition. Another factor that constrained total sales growth was a softer increase in new export orders. The rate of expansion was moderate and the least pronounced in a year-and-a-half.
Factories continued to produce goods at a robust pace that outpaced the long-run series average. That said, with growth softening in the consumer and capital goods segments, while steadying for intermediate goods makers, the overall rate of expansion retreated to an eight-month low.
Cost pressures ticked higher in September, with panellists citing increased chemical, packaging, plastic and metal prices. In historical terms, the rate of inflation was mild.
As a result of rising purchasing prices, as well as greater labour costs and favourable demand conditions, Indian manufacturers lifted their charges in September. The rate of inflation softened to a five-month low and was similar to that seen for input costs.
The rise was supported by new business growth, positive client appetite and greater production requirements. Yet, input buying expanded at the slowest pace in the calendar year-to-date.
Hiring growth also receded in September, reflecting a reduction in the number of part-time and temporary workers at some firms.
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.
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