Manufacturing activity revives from 9-month low to hit 57.5 in Oct

Manufacturing activity for October

India’s manufacturing activity rose to 57.5 in October from the nine-month low of 56.5 hit a month back as new orders and international sales fuelled growth, according to results of a private survey released on November 1.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index stayed above the 55-mark for the tenth consecutive month, indicating a strong momentum.

A reading of over 50 indicates expansion.

The rebound in manufacturing activity bodes well for the economy, which has witnessed an easing of activity over the last three months.

"India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve. Rapidly expanding new orders and international sales reflect strong demand growth for India’s manufacturing sector," said Pranjul Bhandari, chief India economist, HSBC.

Better performance also fuelled optimism. The 400 manufacturers' positive sentiment was higher than the average witnessed over the last 13-and-a-half year series.

"To start the third fiscal quarter, business confidence is also very high due to expectations of continued strong consumer demand, new product releases, and sales pending approval," Bhandari said.

Hiring also received a fillip, with a tenth of panellists reporting an increase in employment, as 1 percent shed jobs.

Inflationary pressures were also higher. Inout price inflation was at a three-month high in the month, while output prices also increased at a solid rate.

Core data released on October 30 showed index of eight core industries, which represent the infrastructure sector and account for 40 percent weight in the index of industrial production, rising 2 percent compared with 1.6 percent contraction seen in the previous month.

India’s export performance, however, was slightly better as it ended the first six months with a 1 percent rise in merchandise exports compared with the previous year.