India’s manufacturing activity rises in October driven by growth in new orders
- The PMI has now remained above its long-term average and above the 50-point expansion threshold for nearly three consecutive years, highlighting a steady pace of growth in India's manufacturing sector.
India's manufacturing activity rebounded in October, shaking off an eight-month low in September as robust demand fuelled growth in new orders and international sales.
The HSBC India Manufacturing Purchasing Managers Index (PMI), compiled by S&P Global, registered 57.5 in October, an uptick from 56.5 in September and matching the level recorded in August. This growth trend echoes recent high points, with readings of 58.1 in July, 58.3 in June, 57.5 in May, and 58.8 in April.
October’s final reading surpassed the preliminary flash estimate of 57.4, indicating resilient momentum. The PMI has now remained above its long-term average and above the 50-point expansion threshold for nearly three consecutive years, highlighting a steady pace of growth in India's manufacturing sector.
The index reflects insights from responses to surveys issued to roughly 400 manufacturers across the country.
Accelerating growth
October saw an acceleration in manufacturing output growth, propelled by a faster rise in new orders and international sales, the survey indicated. Input costs and selling prices both climbed as inflationary pressures in materials, labour, and logistics persisted, driving up business expenses.
"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 at HSBC.
"Meanwhile, input and output prices are both increasing as a result of persistent inflationary pressures in materials, labour, and transportation costs. 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 added.
Improved demand forecasts
The Reserve Bank of India (RBI) recently lifted its FY25 GDP growth projection to 7.2% from 7%, citing increased rural and urban demand as well as a favourable monsoon forecast.
RBI's October bulletin highlighted an anticipated pickup in demand fuelled by the festival season and rising consumer confidence, with rural demand set to gain further from strong agricultural outputs.
Export orders also grew in October, rebounding from September’s 18-month low. Exporters reported stronger gains from markets across Asia, Europe, Latin America, and the US, with demand buoyancy, robust sales pipelines, and favourable market conditions driving output.
The $10 trillion ambition
India has set its sights on transforming into a $10 trillion economy within the next decade, underpinned by an expanding manufacturing sector. Critical areas of focus include semiconductors, electronics, electric vehicles, renewable energy, and defence. The government has increased capital expenditure to enhance infrastructure, create jobs, and stimulate manufacturing to meet these ambitious goals.
Survey results also highlighted rising purchase volumes by manufacturers, with suppliers meeting demand comfortably.
"The latest results highlighted a further increase in quantities of purchases at manufacturers, which suppliers were comfortably able to accommodate. Ongoing improvements in demand and expectations of further growth in the year ahead spurred growth in buying levels," it said.
"Indian manufacturers became more optimistic regarding future output volumes. Rising since September, the level of positive sentiment was above the average seen over the 13-and-a-half-year series history," the Survey added.
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Business NewsEconomyIndia’s manufacturing activity rises in October driven by growth in new orders
First Published:4 Nov 2024, 11:34 AM IST
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