India’s manufacturing PMI expands at stronger pace in October

India’s manufacturing industry remained robust and expanded at a faster pace in October indicating a strong improvement in the health of the sector, a survey showed on Tuesday.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose to 55.3 in October from 55.1 in September.

While a reading above 50 indicates an overall expansion compared to the previous month, a print below 50 shows an overall decrease. The index is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

The upward movement in the October headline figure largely reflected stronger increases in employment and stocks of purchases.

There were signs of substantial capacity pressures on Indian goods producers, as outstanding business volumes rose to the greatest extent in almost two years. This led to the hiring of extra workers by some firms. Manufacturing employment rose at a marked rate that was one of the strongest since data collection started in March 2005, the survey showed.

During the month, firms were again able to secure additional work, taking the current sequence of growth to 16 months. Overall, factory orders increased at an above-trend pace that was nonetheless the weakest since June.

Pollyanna De Lima, Economics Associate Director, S&P Global Market Intelligence said the Indian manufacturing industry again showed signs of resilience in October, with factory orders and production rising strongly despite losing growth momentum.

“Manufacturers continued to loosen the purse strings as they expect demand buoyancy to be sustained in coming months. There was a marked rise in input purchasing, with firms adding to their inventories to better align with client purchasing,” De Lima noted.

Capacities were again expanded to accommodate for improving sales.

In the month, consumer goods was the best-performing category, recording the greatest performances for output, total sales and exports, De Lima added.

Production likewise expanded at a slower rate at the start of the third fiscal quarter, the slowest since June, albeit one that surpassed its long-run average.

Indian manufacturing companies bought additional inputs in October amid efforts to rebuild stocks and fulfil greater sales, the survey showed.

Price pressures were little-changed from September. The overall rate of cost inflation was the second-weakest for two years. In turn, manufacturers limited hikes to output prices.

On the supply side of the manufacturing industry, the latest results showed a modest increase in input lead times which were nevertheless weaker than those recorded during the first Covid-19 lockdown.

Looking ahead, Indian manufacturers remained confident of a rise in production volumes by October 2023, the survey showed. Predictions of better sales and marketing efforts were among the reasons cited for upbeat projections, it said.

Data also indicated that consumer goods was the brightest area of the manufacturing sector in October. Firms in this segment signaled the fastest increases in output, overall sales and exports.

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