Manufacturing activity in India dipped to a five-month low in September as new orders rose at a slower pace, tempering production growth.
As per a monthly survey, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) dropped to 57.5 in September from 58.6 in August — the lowest level in five months.
For the 27th conservative month, the September PMI data indicated an improvement in overall operational conditions. A score of more than 50 implies expansion, whereas a score of less than 50 indicates contraction.
In September, India’s manufacturing industry showed mild signs of slowing owing primarily to a softer increase in new orders which tempered production growth.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, stated, “Nevertheless, both demand and output saw significant upticks, and firms also noted gains in new business from clients across Asia, Europe, North America, and the Middle East”.
According to the survey, on the inflation front, supply-chain conditions were broadly stable, which helped drag down the rate of input price inflation to its weakest in over three years.
However, higher labor costs, positive business morale, and robust demand allowed for a more significant increase in output charges.
“… while robust demand was supportive of production growth, it added to price pressures in September. The solid increase in output charges signaled by the PMI data, which occurred in spite of a notable retreat in cost pressures, could restrict sales in the coming months”, Lima added.
Meanwhile, the RBI Governor will preside over a three-day meeting of the six-member Monetary Policy Committee (MPC) beginning October 4. Governor Skhatikanta Das will make the announcement on Friday (October 6).
Experts believe the Reserve Bank of India will keep the benchmark rate at 6.5 percent in its upcoming bi-monthly monetary policy review.
In terms of employment, the favorable prognosis for production and demand strength resulted in another round of job creation in the manufacturing industry.
Going forward, Indian manufacturers were confident that output volumes would improve over the next 12 months, with the general level of positive attitude reaching its peak in 2023 so far, owing to buoyant customer appetite, advertising, and additional capacities.
“Manufacturers held a strongly positive outlook for production, as they expect demand to strengthen over the course of the coming 12 months. Upbeat forecasts continued to drive job creation efforts and initiatives to replenish input stocks”, Lima continued.
The S&P Global India Manufacturing PMI is compiled by S&P Global from replies to questionnaires issued to purchasing managers in a panel of around 400 manufacturers.
Also read: World Bank: Indian Economy To Rise By 6.3% In FY24
