India’s Manufacturing Sector Slows to Eight-Month Low in September

As per the survey conducted by the seasonally adjusted HSBC India manufacturing PMI, the index fell from 57.5 in August to 56.5 in September and the data revealed a mild setback in manufacturing growth across India. "For the third straight month, rates of

expansion in factory production and sales receded, both of which were at their weakest since the turn of the year but above their respective long-run averages," the survey showed.

Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that momentum in India’s manufacturing sector softened in September from the very strong growth in the summer months. "Output and new orders grew at a slower pace, and the deceleration in export demand growth was especially evident as the new export orders PMI was the lowest since March 2023," he said.

"Input prices rose at a faster rate in September while factory gate price inflation eased, intensifying the compression on manufacturers’

margin. Weaker profit growth might have an impact on companies’ hiring demand, as the pace of employment growth slowed for a third month," he added.

The survey further noted that international orders rose at the slowest pace in a year-and-a half. "Despite this loss of growth momentum, net employment and quantities of purchases rose, while business confidence was broadly aligned with its long-run average. On the price front, there were moderate increases in input costs and selling charges," it said.

"Positive demand trends, successful advertising and favourable client interest featured as the main determinants of sales growth among the qualita.tive part of the survey. The upturn, which was substantial but the slowest in 2024 so far, was reportedly curbed by fierce competition. Another factor that constrained total sales growth was a softer increase in new export orders," it added.