India's manufacturing sector experienced a moderation in its growth rate during October, according to the latest Purchasing Managers' Index (PMI) survey results. The HSBC India Manufacturing Purchasing Managers' Index (PMI) declined to 55.5 in October, down from 57.5 recorded in September. Despite this easing, the index figure indicates continued expansion in the sector, as any reading above 50 signifies growth.

This marks the fifth consecutive month of moderation in the pace of manufacturing expansion. The slowdown was primarily attributed to a softer increase in new orders, which registered its slowest growth rate in eight months. Production increases also showed their weakest performance in a year, further contributing to the overall easing of activity. Export orders, while continuing to expand, did so at a reduced pace compared to the previous month.

Input cost inflation intensified in October, reaching an 11-month high. Manufacturers reported facing higher prices for a range of materials, including cotton, chemicals, and plastics. In response to these rising input costs, companies adjusted their output charges, albeit at a slower rate than the increase in their own expenses. Employment levels in the sector saw a slight, largely negligible increase, with a substantial majority of companies (98%) reporting no change in staffing during the month.

  • HSBC India Manufacturing PMI: 55.5 in October (down from 57.5 in September).
  • Expansion Threshold: Any reading above 50 indicates expansion.
  • New Orders Growth: Slowest rate in eight months.
  • Production Increases: Weakest in a year.
  • Input Cost Inflation: Reached an 11-month high.
  • Key Materials: Cotton, chemicals, and plastics cited for price increases.
  • Employment: Marginal increase, with 98% of firms reporting no change.
  • Survey Conductor: S&P Global, sponsored by HSBC.
  • Panel Size: Approximately 400 manufacturers surveyed.
  • Data Collection Period: October 12-25.

Despite the observed moderation in activity, business sentiment among manufacturers saw an improvement, reaching a one-year high. This optimism was reportedly driven by expectations of better demand conditions and the anticipation of new order inflows in the coming months. Pranjul Bhandari, Chief India Economist at HSBC, noted that the manufacturing PMI for India indeed indicated a slowdown in the pace of expansion for October, reinforcing the trend of moderation over the past several months. The sustained expansion, even at a reduced rate, underscores the sector's underlying resilience amid evolving economic conditions.