Manufacturing activity regained momentum in November, aided by strengthening demand and lower input cost inflation, according to private survey data released Friday.
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose to 56 in November after easing to an eight-month low of 55.5 in October. A value of over 50 denotes expansion.
“India’s manufacturing industry maintained its robust performance in November, with output regaining growth momentum. Firms’ ability to secure new business, both domestically and from abroad, remained central to the success of the sector,” Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
Although the reading was below the 57.9 average for the second quarter of FY24, it was higher than the series trend.
The manufacturing firms surveyed reported a rise in export orders for the twentieth consecutive month, with new business coming from Africa, Asia, Europe and the US, leading to higher production volumes.
“Sustained new order growth continued to be good news for the sector’s labour market, with recruitment remaining on an upward path,” De Lima noted.
Experts indicated that the current set of numbers bodes well for manufacturing growth in the coming year as well.
“Expanded capacities, rising workloads and the need to replenish stocks of finished goods collectively indicated that India’s manufacturing economy is clearly in good shape as 2023 draws to a close, with expectations for a continued strong performance in 2024,” De Lima said.
India’s growth dynamics held steady in the second quarter, with GDP growth rising to 7.6% on the back of strong manufacturing growth and higher investment.
Core sector growth data released earlier this week also showed signs of improvement in infrastructure output.
“The manufacturing sector seems to be holding up reasonably well, based on hard data both from Q3 GDP and core infra index for October,” said Rahul Bajoria, MD and head of EM Asia (ex-China) economics, Barclays.
Investment bank Goldman Sachs recently pointed out that growth in the coming year will be supported by higher private investment.
“The outlook for India’s manufacturing sector remained favourable in November, with firms seeing opportunities in the form of demand strength, marketing initiatives and new clients making enquiries about a wide range of products,” the PMI report stated.
Future outlook slipped to a seven-month low owing to rising inflation expectations, according to 400 manufacturers surveyed by S&P Global.
Experts indicate that growth is expected to slow in the next two quarters.
Although the rate of input inflation eased to its lowest level in 40 months, manufacturers expressed concerns over rising prices in the near term.
International organisations have been highlighting a delay in RBI rate cuts due to inflationary pressures.
OECD, in its latest outlook, said that the central bank will start cutting rates from mid-2024.
RBI’s Monetary Policy Committee will likely hold the policy rate at 6.5% for the fifth consecutive meeting next week.
Manufacturing PMI
| Month | PMI |
| Jul-22 | 56.4 |
| Aug-22 | 56.2 |
| Sep-22 | 55.1 |
| Oct-22 | 55.3 |
| Nov-22 | 55.7 |
| Dec-22 | 57.8 |
| Jan-23 | 55.4 |
| Feb-23 | 55.3 |
| Mar-23 | 56.4 |
| Apr-23 | 57.2 |
| May-23 | 58.7 |
| Jun-23 | 57.8 |
| Jul-23 | 57.7 |
| Aug-23 | 58.6 |
| Sep-23 | 57.5 |
| Oct-23 | 55.5 |
| Nov-23 | 56 |
Note: A value of over 50 denotes expansion
Source: S&P Global
