India’s manufacturing sector recorded another strong expansion in October, although growth in output and new orders softened. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) stood at 54.7, down from 55.1 in September but still above the 50.0 neutral mark and its long-run average, as export sales grew at a six-month high and price pressures eased.

New business continued to rise sharply, with growth easing only marginally from September’s seven-month high and remaining strong by historical standards. Survey panel members cited favourable demand trends, new client wins and successful marketing campaigns.

Overseas markets supported the upturn, with new export orders increasing at the fastest pace in six months. Companies reported gains from Bangladesh, Canada, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka, the UK, the US and the UAE, S&P Global said in a press release.

Manufacturers lifted output at a sharp rate that exceeded its long-run average, supported by rising sales and new product releases. Output growth nevertheless slowed from the previous month because of weaker expansion among intermediate goods makers, though that category still led the overall expansion, the survey showed.

Cost pressures moderated across all three broad areas of India’s manufacturing industry monitored by the PMI survey. Although firms reported higher prices for several materials and energy, the overall rate of input cost inflation retreated to its lowest level since February. Indian goods producers raised selling prices to protect margins, but the increase was slight and the weakest in just under four years.

Pranjul Bhandari, chief India economist, HSBC, said, "India’s manufacturing PMI softened to 54.7 in October from 55.1 in the previous month, but remained firmly in expansionary territory and above its long-run average. Strong international demand pushed growth of new export orders to a six-month high, supporting a robust rise in output. Producers also increased input inventories to the greatest extent in eight months, building precautionary buffers to mitigate potential shortages and meet rising production requirements amid a volatile global environment. Although some material and energy costs increased, overall input and output price pressures eased slightly from the previous month."

Higher production requirements and rising workloads led to a second successive monthly increase in factory employment. The pace of job creation eased and was only slight, while capital goods producers reduced staffing and employment growth was seen elsewhere.

Outstanding business volumes rose for the seventh consecutive month at the start of the third fiscal quarter, although the pace of accumulation was fractional. Manufacturers also continued to build inventories: finished goods stocks rose at an unprecedented pace as firms sought to accommodate buoyant demand and prevent shortages, while input inventories increased more quickly, with the rate of accumulation reaching an eight-month high.

Input purchasing growth continued for a sixty-fourth straight month in October, but the pace of expansion slowed to the weakest level over that period. Business confidence slipped from September and remained below its long-run average, with close to 18 per cent of manufacturers expecting higher output over the coming year and the rest neutral. Qualitative survey data showed that positive expectations were underpinned by new client enquiries and demand for industrial automation and technology solutions.

Fibre2Fashion News Desk (CG)