Factory output growth hits 8-month low in September
The rate of inflation softened to a five-month low, despite increased input costs which also caused manufacturers to raise charges. Buying of inputs also fell to its slowest since the start of this year.
India’s manufacturing activity, as measured by the HSBC India Manufacturing Purchasing Managers’ Index (PMI), slipped to an eight-month low in September as output and new orders , including international ones softened, according to a release by S&P Global on Tuesday.
The seasonally adjusted HSBC India PMI, which is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers, fell to its weakest in this calendar year at 56.5 — the January reading was also the same — in September from 57.5 in August.
“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,” said Pranjul Bhandari, Chief India Economist at HSBC.
Both the rates of expansion in factory output and sales fell, though remaining above their long-run averages. To be sure, the reading remained above its long-run average of 54 and was also above the 50-mark, which indicates expansion over last month. The index has remained above 50 for over three years now. The September number was marginally lower than the Flash PMI reading of 56.7 released on September 23.
The rate of expansion in factory output fell to an eight-month low. The rate of inflation softened to a five-month low, despite increased input costs which also caused manufacturers to raise charges. Buying of inputs also fell to its slowest since the start of this calendar year.
There was, similarly, a slowing in hiring growth in September, which reflects a reduction in the number of part-time and temporary workers at some firms, said the release.
“Input prices rose at a faster rate in September while factory gate price inflation eased, intensifying the compression on manufacturers’ margins. Weaker profit growth might have an impact on companies’ hiring demand, as the pace of employment growth slowed for a third month,” Bhandari added.
Outstanding business volumes were unchanged in September, ending an 11-month sequence of accumulation of backlog.
The HSBC Services PMI data will be released on October 4.