NEW DELHI: India’s manufacturing sector growth eased to a joint 11-month low in November, with the Purchasing Managers’ Index (PMI) slipping to 56.5 from October’s 57.5, according to a monthly survey released on Monday. Despite the decline, the sector remained firmly in expansion territory, supported by strong international demand.
The seasonally adjusted HSBC India Manufacturing PMI, compiled by S&P Global, reflected a softer improvement in the sector’s health. A PMI reading above 50 signals expansion, while below 50 indicates contraction.
“India’s manufacturing sector recorded a 56.5 manufacturing PMI in November, down slightly from the previous month, but still firmly within expansionary territory,” said Pranjul Bhandari, Chief India Economist at HSBC. She noted that robust global demand, marked by a four-month high in new export orders, drove growth, even as rising price pressures dampened the pace of output expansion.
Price pressures hinder growth
Domestic demand remained positive, but competitive conditions and inflationary pressures restrained growth. “Goods producers experienced a weaker yet robust upturn in new business during November,” the survey noted, adding that fierce competition and rising costs moderated the expansion.
India’s manufacturing sector passed on higher costs to clients, with selling prices rising at their fastest pace since October 2013. This was driven by increased freight, labour, and material costs, particularly for inputs like chemicals, cotton, leather, and rubber.
Economic impact
On the broader economic front, India’s GDP growth for July-September slowed to 5.4%, the lowest in nearly two years, as manufacturing, mining, and consumption weakened. Retail inflation hit a 14-month high of 6.21% in October, exceeding the RBI’s tolerance band due to rising food prices.
Although higher costs weighed on domestic sales, new export orders showed solid growth. “The rate of expansion in international demand was the best in four months, with gains from markets including Bangladesh, China, the US, and the UK,” the survey revealed.
Optimism amid challenges
India’s manufacturing sector continued to increase production and expand their workforce, marking the ninth consecutive month of job creation. Business optimism remained strong, driven by expectations of robust demand, new product launches, and marketing efforts. Capacity expansion also contributed to upbeat forecasts for 2025.
The HSBC India Manufacturing PMI survey is based on responses from 400 purchasing managers across various manufacturing segments, reflecting the sector’s performance and challenges in November.
