Key Takeaways
- The Indian manufacturing PMI fell to 56.5 in November 2024, indicating a slowdown in factory activity.
- The slowdown in factory activity is attributed to inflationary pressure and competitive conditions.
- The Reserve Bank of India (RBI) estimates that the GDP growth rate will be affected by the slowdown in the manufacturing sector.
New Delhi: India’s factory activities continued to be in expansionary mode in the festive month of November 2024 but pace of growth slowed down due to inflationary pressure, a private survey showed on Monday.
India manufacturing Purchasing Managers’ Index (PMI) compiled by S&P Global fell to 56.5 in November this year from 57.5 in the previous month.
A PMI print below 50 means contraction while above it shows expansion in activities.
“India recorded a 56.5 manufacturing PMI in November, down slightly from the prior month, but still firmly within expansionary territory. Strong broad-based international demand, evidenced by a four-month high in new export orders, fuelled the Indian manufacturing sector’s continued growth. At the same time, however, the rate of output expansion is decelerating due to intensifying price pressures,” said Pranjul Bhandari, Chief India Economist at HSBC.
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. The HSBC India Manufacturing PMI is closely watched by economists, markets, and policy-makers for its impact on the Indian economy.
The survey said that positive demand trends fed through to sharp expansions in sales and output in November this year, though firms indicated that growth was somewhat restricted by competitive conditions and price pressures.
“Goods producers experienced a weaker, albeit still robust, upturn in new business intakes during November. The rate of expansion was the second-weakest in 11 months, ahead of that registered in September. Growth was supported by favourable demand conditions, but stymied by fierce competition and price pressures.
Hit by subdued growth in the manufacturing sector, India’s gross domestic product (GDP) growth slowed down to 5.4% year-on-year in the July-September quarter (Q2) of current financial year 2024-25. The Q2 GDP print has been much below the estimates of most economists and also lower than the Reserve Bank of India (RBI) estimate.
