India's Manufacturing Sector Recovers As PMI Rises To 57.5 in October

New Delhi: India's manufacturing sector growth recovered from an eight-month low recorded in September, according to a recent survey. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rose from 56.5 in September to 57.5 in October, indicating a substantial and accelerated improvement in operating conditions.

In PMI parlance, a print above 50 means 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," Pranjul Bhandari, Chief India Economist at HSBC, said. 

The upturn in performance was boosted by stronger demand for Indian goods. Moreover, the introduction of new products and successful marketing initiatives helped enhance sales performance.

Manufacturing Sector Sees Strong Growth in New Orders Amid Rising Inflationary Pressures

New export orders also exhibited stronger growth, following the weakest uptick in a year-and-a-half during September. Panel members reported gains in new contracts from Asia, Europe, Latin America and the US. On the prices front, the October data signalled stronger inflationary pressures across India's manufacturing sector. Goods producers were also more willing to take on additional staff, which coupled with rising material costs, added to business expenses. Both input prices and selling charges increased at stronger rates. 

"Input and output prices are both increasing as a result of persistent inflationary pressures in materials, labour and transportation costs," Pranjul Bhandari added.

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On the employment front, not only did manufacturers hire extra staff at the start of the third fiscal quarter, but also to a greater degree than in September. Around one in ten panellists reported an increase in employment, while 1 per cent shed jobs. Going ahead, Indian manufacturers became more optimistic 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 sales pending approval," Pranjul Bhandari further stated. The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

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