India’s manufacturing growth accelerates in October: PMI-OxBig News Network

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| Photo Credit: B. Jothi Ramalingam

Manufacturing activity in India’s private sector recovered in October, breaking a three-month streak of deceleration after hitting an eight-month low in September, as per the survey-based HSBC India Manufacturing Purchasing Managers’ Index (PMI) which inched up to 57.5 from 56.5 in the previous month.

A reading of over 50 on the index indicates an expansion in activity.

The 400-odd factories surveyed for the index by S&P Global Market Intelligence reported an acceleration in output growth in October, with new orders and international sales driving the uptick.

Fresh export orders rebounded in October, after rising at the mildest pace in 18 months during September, with firms reporting new deals from clients in Asia, Europe, Latin America and the US.

Production volumes increased, led by robust gains in the consumer and investment goods categories, with companies referring to demand buoyancy, positive sales pipelines and favourable market conditions as key factors.

However, inflation pressures increased as input costs rose at a three-month high pace, with firms attributing most of these pressures to freight, labour and material costs. In response, companies opted to increase their output price at a solid rate that outpaced the trend.

India’s inflation rose to a nine-month high of 5.49% in September, largely driven by higher food prices and close to the upper end of the Reserve Bank of India’s (RBI) 2-6% target.

“India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve,” noted Pranjul Bhandari, chief India economist at HSBC.

“Rapidly expanding new orders and international sales reflect strong demand growth for India’s manufacturing sector.”

Buoyant demand also boosted the outlook for the year ahead.

“Business confidence is also very high due to expectations of continued strong consumer demand, new product releases, and sales pending approval,” added Mr. Bhandari.

To meet growing demand, firms took on many more workers than in September. Hiring increased for an eighth consecutive month.

(With inputs from Reuters)