Key Takeaways
- The Indian manufacturing sector continues to expand, but at a slower pace.
- New business orders rose sharply in the second fiscal quarter, but the pace of expansion eased to a seven-month low.
- Job creation softened midway through the second fiscal quarter as a few firms trimmed headcounts.
New Delhi: India’s factory activities grew at a slower pace in August this year, with manufacturing purchasing managers’ index (PMI) easing to 57.5 during the month from 58.1 in the previous month, as per a survey released on Monday.
The HSBC India Manufacturing PMI, compiled by S&P Global, remained above its long-run average of 54. This signals a substantial improvement in operating conditions, which is a positive sign for the Indian manufacturing sector.
A PMI print below 50 means contraction, while above it shows expansion in activities.
“The Indian manufacturing sector continued to expand in August, although the pace of expansion moderated slightly. New orders and output also mirrored the headline trend, with some panelists citing fierce competition as a reason for slowdown,” said Pranjul Bhandari, Chief India Economist at HSBC.
The economist noted that business outlook for the year ahead moderated slightly in August, driven by competitive pressures and inflation concerns.
The survey said that new business rose sharply midway through the second fiscal quarter, but the pace of expansion eased to a seven-month low. Panel members attributed the increase to advertising, brand recognition, and healthy demand trends. Competitive conditions reportedly dampened growth.
“New export orders likewise increased at the weakest pace since the start of the 2024 calendar year. Yet, one-in-ten firms noted an improvement in international sales, which they associated with stronger demand from Asia, Africa, Europe, and the US,” it stated.
The survey also said that job creation softened midway through the second fiscal quarter as a few firms trimmed headcounts.
“Despite the slowdown in cost pressures, there was a marked increase in prices charged for Indian goods in August,” the survey noted.
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. It is one of the closely watched high-frequency data by economists, markets, and policymakers.
