India’s manufacturing PMI rises to 57.5 in October on expanding new orders, international sales
Pranjul Bhandari, Chief India Economist at HSBC, said, “India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve.”
India’s manufacturing activity gained momentum in October, rising to 57.5 from falling to an eight-month low of 56.5 in September, indicating a substantial and accelerated improvement in operating conditions, data released by S&P Global on Monday showed. Output growth, it said, accelerated in October, fuelled by faster increases in total new orders and international sales.
An associated rise in production requirements boosted demand for raw materials, with suppliers comfortably able to deliver inputs in a timely manner. 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, the report by S&P Global stated.
Pranjul Bhandari, Chief India Economist at HSBC, said, “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. Meanwhile, input and output prices are both increasing as a result of persistent inflationary pressures in materials, labour, and transportation costs. 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.”
The improvement in performance was boosted by stronger demand for Indian goods. “Companies noted a quicker increase in order book volumes that was stronger than the average seen in nearly 20 years of data collection. Anecdotal evidence suggested that the introduction of new products and successful marketing initiatives helped enhance sales performances,” the report said.
The survey report also highlighted that new orders exhibited stronger growth as against the weakest uptick in a year-and-a-half during September, with gains noted in new contracts from Asia, Europe, Latin America, and the United States.
The S&P Global report said, “Production volumes were ramped up to a greater degree in October, fuelled by faster increases in the consumer and investment goods categories. When explaining the latest upturn in output, companies remarked on demand buoyancy, positive sales pipelines and favourable market conditions.”
The data released for the month of October signalled stronger inflationary pressures across India’s manufacturing sector. While the input price inflation rose to a three-month high while remaining below its long run trend. Further, output prices increased at a solid rate that outpaced the series trend. According to firms that were monitored, freight, labour and materials were the key sources of price pressures. The manufacturers not only hired extra staff at the start of the third fiscal quarter, it was on a greater scale in comparison to September.
