India’s Manufacturing Sector Hits Five-Month Low in September Amid Slower New Order Growth: PMI Report
03-10-2023 : In September, India’s manufacturing sector experienced a slowdown, hitting a five-month low, primarily due to a softer increase in new orders, according to a monthly survey. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) for September fell to 57.5, down from 58.6 in August, marking the lowest level in five months.
The September PMI data, while reflecting a slowdown, still indicated overall improvement in operating conditions for the 27th consecutive month. In PMI terminology, a reading above 50 indicates expansion, while a score below 50 signals contraction.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, noted, “India’s manufacturing industry showed mild signs of a slowdown in September, primarily due to a softer increase in new orders which tempered production growth. Nevertheless, both demand and output saw significant upticks, and firms also noted gains in new business from clients across Asia, Europe, North America, and the Middle East.”
On the inflation front, supply-chain conditions remained relatively stable, leading to a slowdown in the rate of input price inflation to its weakest level in over three years.
However, despite the subdued input price inflation, greater labor costs, positive business confidence, and strong demand contributed to a more pronounced increase in output charges. Lima cautioned that this could potentially limit sales in the coming months.
The Monetary Policy Committee (MPC), chaired by RBI Governor Shaktikanta Das, is scheduled to convene for three days starting October 4, with a decision announcement slated for October 6. Experts anticipate that the Reserve Bank of India may maintain the benchmark rate at 6.5 percent during the upcoming bi-monthly monetary policy review.
On the employment front, the positive outlook for production and robust demand led to further job creation within the manufacturing sector. Looking ahead, Indian manufacturers expressed confidence that output volumes would rise over the next 12 months. Overall sentiment for the manufacturing sector in 2023 remained optimistic, driven by strong customer demand, advertising efforts, and increased production capacities.
The S&P Global India Manufacturing PMI is compiled based on responses from around 400 manufacturers’ purchasing managers, providing insights into the health and trends of India’s manufacturing sector.
