Informist, Monday, Nov. 4, 2024

--India Oct manufacturing PMI 57.5 vs 56.5 in Sept

NEW DELHI – India's manufacturing sector activity expanded at a faster pace in October than September, with the HSBC India Manufacturing Purchasing Managers' Index rising to 57.5 from September's eight-month low of 56.5, S&P Global said Monday. The final print for October is broadly in line with the provisional estimate, with the flash PMI released on Oct. 24 pegging last month's manufacturing print at 57.4.

A PMI reading of more than 50 denotes expansion in activity from the previous month, while a print below 50 is indicative of contraction. "Rapidly expanding new orders and international sales reflect strong demand growth for India's manufacturing sector," Pranjul Bhandari, chief India economist at HSBC, said in a statement.

According to S&P Global, the surveyed companies reported a faster-than-average increase in order books in October, with orders from abroad also growing stronger than usual after a weak September. "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," S&P Global said.

The 'buoyancy' in demand for consumer and investment goods will be music to policymakers' ears, with recent comments from experts warning of a slowdown in spending. Last week, the finance ministry wrote in its Monthly Economic Review report that there was evidence of a slowdown in urban demand in the first half of 2024-25 (Apr-Mar). "Going forward, the ongoing festive season and improvement in consumer sentiments may boost urban consumer demand. However, early indications were not particularly promising," the finance ministry had said on Oct. 28. Economists from Nomura had also warned on the same day that high-frequency data suggested the Indian economy has entered a "cyclical growth slowdown". At the other end of the spectrum has been the Reserve Bank of India, which has continued to bat in favour of growth conditions, with Governor Shaktikanta Das arguing over the last one month that the positives "significantly outweigh" the negatives.

To meet the higher orders, S&P Global said Monday that manufacturers hired more employees in October than in September, with payrolls increasing for around 10% of survey respondents and decreasing for only 1% of them. The rise in jobs helped reduce order backlogs in October for the first time in more than a year.

However, on the prices front, the new data showed input costs for manufacturers rose the most in three months in October, although below their long-term trend. On the other hand, prices charged by manufacturers "increased at a solid rate" that was higher than the series trend. This will be of concern to the RBI, with the Monetary Policy Committee having changed its stance to neutral from withdrawal of accommodation in October even as it left the policy repo rate unchanged at 6.50% for the 10th meeting in a row. Expectations of a rate cut at the committee's December meeting are not as high as they were on the day of the MPC's decision on Oct. 9, with headline retail inflation surging to a nine-month high of 5.49% in September, leading to Governor Das warning subsequently that an interest rate cut at the current juncture would be risky and premature.

On the whole, Indian manufacturers became "more optimistic" about future output volumes in October, with pre-production inventories seeing a "substantial" rise that was "one of the most marked in close to 20 years of data collection", S&P Global noted on Monday. End

Reported by Siddharth Upasani

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.