Cost pressure and muted demand for certain products drove India’s manufacturing activity to an eight-month low of 55.5 in October as against an S&P Global Purchasing Managers’ Index (PMI) of 57.5 a month back, data released on November 1 showed.
According to the latest PMI report, growth eased in October due to competitive pressure and weak demand at some plants. Though there was further increase in new orders, the rate of expansion was the softest in a year, with consumer goods especially affected.
Growth of international sales though remained historically strong, the rise in October was the weakest in four months pointing at a loss in momentum, the report added.
However, the latest reading continues to be above the long-run average of 53.9 even as October saw the slowest rate of expansion since February.
"India's manufacturing sector generated substantial growth in October, despite a challenging global economic environment. Still, insights from surveyed purchasing managers pointed to the deceleration of several measures," Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said.
Business sentiment though remained firmly inside positive territory, it slipped to a five-month low amid concerns surrounding the path for inflation and demand. In prices, the trend was a mixed bag. While both input costs and output charges increased, the inflation of the former accelerated while factory gate charges rose to a weaker extent.
The report said that the rate of job creation last month was the slowest since April even as ongoing increases in new business continued to spur recruitment efforts among goods producers in India.
"October data pointed to sufficient capacity levels at Indian manufacturers, as backlogs of work were little-changed since September. Concurrently, suppliers were often able to deliver inputs in a timely manner, with vendor performance being broadly stable," it said.
The deceleration in Manufacturing PMI for October comes a day after data revealed that India's eight core sectors posted a growth of 8.1 percent in September - the lowest in four months. With the eight core industries making up more than 40 percent of the weight of the Index of Industrial Production (IIP), the former is seen as a lead indicator of industrial growth. As such, a weaker core sector growth number in September may mean a lower IIP growth figure for the month, data for which will be released on November 10.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
