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India's manufacturing PMI eases to 54.7 in October as export orders hit six-month high

By · Via Times of India · Published by Everything Blog

In short

The seasonally adjusted factory index dropped slightly in October yet remained firmly in growth territory above the key 50-mark threshold. While manufacturing output and new order expansion slowed, export sales surged to their strongest level in six months to cushion overall activity. Finished goods inventories accumulated at the fastest pace recorded in the survey's history as companies reinforced operational buffers. Factory sentiment remained subdued, with less than a fifth of surveyed businesses predicting production increases over the coming year.

Key points

  • International demand cushioned the broader moderation in domestic output and new order ex…: International demand cushioned the broader moderation in domestic output and new order expansion.
  • Factory cost pressures dropped to their lowest level since February alongside slowing sel…: Factory cost pressures dropped to their lowest level since February alongside slowing selling price increases.
  • Business sentiment stayed below the long-run average as only about 18 percent expected ou…: Business sentiment stayed below the long-run average as only about 18 percent expected output growth.

Sources checked by our analysis pipeline: 1

India's manufacturing activity expanded at a slower pace in October as growth in output and new orders moderated, although stronger overseas demand supported production and helped cushion the slowdown.

Factory employment continued to rise, while input cost inflation eased to its lowest level since February, a monthly survey showed on Monday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 54.7 in October from 55.1 in September.

Despite the decline, the index remained above its long-run average and comfortably higher than the neutral mark of 50, which separates expansion from contraction.

Growth in new business remained strong, although it eased marginally from September's seven-month high. New export orders, however, increased at their fastest pace in six months, according to the survey.

Manufacturers reported higher demand from markets including Bangladesh, Canada, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka, the UK, the US and the UAE.

"Strong international demand pushed growth of new export orders to a six-month high, supporting a robust rise in output," said Pranjul Bhandari, chief India economist at HSBC.

Output rises,…

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