India's manufacturing PMI sinks

to an 8-month low of 55.5 in Oct

Though there was a further increase in new orders, the rate of
expansion was the softest in a year, with consumer goods especially
affected.

MONEYCONTROL NEWS
NOVEMBER 01, 2023 / 11:29 AM IST

Cost pressure and muted demand for certain products drove India’s
manufacturing activity to an eight-month low of 55.5 in October as
against an S&P Global Purchasing Managers’ Index (PMI) of 57.5 a
month back, data released on November 1 showed.

According to the latest PMI report, growth eased in October due to

competitive pressure and weak demand at some plants. Though there
was further increase in new orders, the rate of expansion was the
softest in a year, with consumer goods especially affected.

Growth of international sales though remained historically strong, the

rise in October was the weakest in four months pointing at a loss in
momentum, the report added.

However, the latest reading continues to be above the long-run

average of 53.9 even as October saw the slowest rate of expansion
since February.

"India's manufacturing sector generated substantial growth in October,

despite a challenging global economic environment. Still, insights from
surveyed purchasing managers pointed to the deceleration of several
measures," Pollyanna De Lima, Economics Associate Director at S&P
Global Market Intelligence, said.

Business sentiment though remained firmly inside positive territory, it

slipped to a five-month low amid concerns surrounding the path for
inflation and demand. In prices, the trend was a mixed bag. While both
input costs and output charges increased, the inflation of the former
accelerated while factory gate charges rose to a weaker extent.

The report said that the rate of job creation last month was the slowest
since April even as ongoing increases in new business continued to
spur recruitment efforts among goods producers in India.

"October data pointed to sufficient capacity levels at Indian

manufacturers, as backlogs of work were little-changed since
September. Concurrently, suppliers were often able to deliver inputs in
a timely manner, with vendor performance being broadly stable," it
said.

The deceleration in Manufacturing PMI for October comes a day after

data revealed that India's eight core sectors posted a growth of 8.1
percent in September - the lowest in four months. With the eight core
industries making up more than 40 percent of the weight of the Index
of Industrial Production (IIP), the former is seen as a lead indicator of
industrial growth. As such, a weaker core sector growth number in
September may mean a lower IIP growth figure for the month, data for
which will be released on November 10.