New Delhi: India’s manufacturing sector growth rebounded from September’s eight-month low to 57.5 in October, fueled by faster increases in total new orders and international sales, according to a monthly survey released on Monday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from September’s eight-month low of 56.5 to 57.5 in October, indicating a substantial and accelerated improvement in operating conditions. In PMI parlance, a score above 50 signifies expansion, while a score below 50 denotes contraction.
“India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve. Rapidly expanding new orders and international sales reflect strong demand growth for India’s manufacturing sector,” said Pranjul Bhandari, Chief India Economist at HSBC. The upturn in performance was bolstered by stronger demand for Indian goods, alongside the introduction of new products and successful marketing initiatives that enhanced sales performance.
New export orders also showed stronger growth, following the weakest uptick in a year and a half during September. Panel members reported gains in new contracts from regions including Asia, Europe, Latin America, and the US. However, the October data also signaled stronger inflationary pressures across India’s manufacturing sector, with goods producers becoming more willing to take on additional staff. This, coupled with rising material costs, contributed to increased business expenses, as both input prices and selling charges rose at stronger rates.
On the employment front, manufacturers not only hired extra staff at the start of the third fiscal quarter but did so to a greater extent than in September. Around one in ten panelists reported an increase in employment, while only 1 percent reduced their workforce. Looking ahead, Indian manufacturers expressed greater optimism regarding future output volumes. “To start the third fiscal quarter, business confidence is also very high due to expectations of continued strong consumer demand, new product releases, and pending sales approvals,” Bhandari noted. The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of approximately 400 manufacturers.
