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Manufacturing PMI falls to 56.5 in November

Dec 03, 2024 06:58 AM IST

India's manufacturing PMI fell to 56.5 in November from 57.5 in October, indicating continued growth despite rising costs and muted domestic demand.

NEW DELHI India’s manufacturing activity, as measured by the HSBC India Manufacturing Purchasing Managers’ Index (PMI), came at 56.5 in November, lower than the 57.5 reading in October and the flash PMI reading of 57.3, according to a release by S&P Global on Monday.

Manufacturing PMI falls to 56.5 in November
Manufacturing PMI falls to 56.5 in November

To be sure, the reading remained above its long-run average of 54 and was also above the 50-mark, which indicates expansion over the previous month. The index has remained above 50 for over three years now.

“India recorded a 56.5 manufacturing PMI in November, down slightly from the prior month, but still firmly within expansionary territory. Strong broad-based international demand, evidenced by a four-month high in new export orders, fuelled the Indian manufacturing sector’s continued growth,” said Pranjul Bhandari, Chief India Economist at HSBC.

The rate of expansion in production was the weakest in this calendar year and the rate of expansion in new business orders was the second-weakest in eleven months, higher only than that in September. Increased competition, higher prices and muted demand were major headwinds to growth in industrial activity. Factory employment increased for the ninth month in a row, but was lower than that in October.

Cost pressures increased and manufacturers raised their selling prices to the highest in over a decade -- since October 2013, to be precise. Input costs also increased to the highest since July, but remained below the long-run average. International sales continued to be strong in November, although domestic sales took a hit because of increased prices. The rate of expansion for international demand was the highest in four months, the release said.

“The rate of output expansion is decelerating due to intensifying price pressures. Input prices for a variety of intermediate goods — including chemicals, cotton, leather, and rubber — rose in November, while output prices soared to an 11-year high as rising input, labour, and transportation costs were passed on to consumers,” Bhandari added.

The composite PMI, which gives the combined value for business activity in the manufacturing and services sectors, and the HSBC Services PMI data will be released on December 4.

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