Manufacturing PMI rises to 57.5 in October

The manufacturing PMI reading was also slightly higher than the flash PMI of 57.4, which was released last week.

India’s manufacturing activity, as measured by the HSBC India Manufacturing Purchasing Managers’ Index (PMI), rose in October after September’s eight-month low as demand for goods picked up again, according to a release by S&P Global on Monday.

The manufacturing PMI reading was also slightly higher than the flash PMI of 57.4, which was released last week. (REUTERS)

The seasonally adjusted HSBC India PMI, which is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers, rose to 57.5 in October from 56.5 in September. The manufacturing PMI reading was also slightly higher than the flash PMI of 57.4, which was released last week.

“India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve. Rapidly expanding new orders and international sales reflect strong demand growth for India’s manufacturing sector,” said Pranjul Bhandari, Chief India Economist at HSBC.

Increase in order book volumes was stronger than the average seen in nearly 20 years of data collection, according to the release. 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.

New export orders also increased, recovering from the year-and-a-half low seen in September. Output of manufacturers also increased, especially in the consumer and investment goods categories. Inflationary pressures also saw an uptick, with input prices rising to a three-month high.

Manufacturers hired extra staff at the start of the third fiscal quarter, with hiring in October exceeding that in September. Approximately one in 10 panellists reported an increase in employment, while 1% shed jobs, said the release.

Firms increased their preproduction inventories to meet the increased demand, which was assisted by shorter delays in deliveries from suppliers. The accumulation of stock in October was one of the most marked in close to 20 years of data collection.

“Input and output prices are both increasing as a result of persistent inflationary pressures in materials, labour, and transportation costs. To start the third fiscal quarter, business confidence is also very high due to expectations of continued strong consumer demand, new product releases, and sales pending approval,” Bhandari added.

The composite PMI, which gives the combined value for business activity in manufacturing and services sectors and the HSBC services PMI data will be released on November 6.