India's Manufacturing Sector Growth Drops To 5-yr Low With PMI At 52.8
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that India's final manufacturing PMI slipped to 52.8 in August, extending its decline for a third consecutive month. “The output index fell to its lowest level since August 2021, signalling that production is still expanding but at a markedly slower pace,” Bhandari said
New Delhi: India's manufacturing sector expanded at its slowest pace in five years to 52.8 in August as the country’s demand remained soft, leading to job losses for the first time in more than two years, a private monthly survey showed on Tuesday.
The seasonally adjusted HSBC India manufacturing purchasing managers' index (PMI) declined from 53.5 in July to 52.8 in August, indicating the weakest improvement in the health of the sector for five years. In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that India's final manufacturing PMI slipped to 52.8 in August, extending its decline for a third consecutive month. “The output index fell to its lowest level since August 2021, signalling that production is still expanding but at a markedly slower pace,” Bhandari said.
As per the survey, firms reported softer demand conditions, which subsequently led to weaker increases in buying levels and stocks, as well as a mild decline in employment. “New orders continued to grow, though at their weakest pace in five years. The survey respondents linked the slower expansion to difficult market conditions and softer demand for certain products,” it said.
Meanwhile, the survey also noted that export sales continued to climb, driven by demand from key markets such as Australia, Germany, mainland China, Spain, Thailand, and the US. However, the expansion rate for international orders moderated compared to July.
On the jobs front, manufacturing employment fell for the first time in two-and-a-half years, though the rate of decline was only fractional. Companies that reduced staffing levels mainly cited lower business requirements. “Employment edged into a mild contraction in August, the first decline after more than two years of job growth. Meanwhile, input cost pressures continued to ease, and manufacturers responded by raising selling prices more modestly,” Bhandari said.
On the price front, the survey, however, said that manufacturers faced higher costs for materials, including steel, and transport, but the overall rate of inflation was moderate and the weakest for six months. “Easing cost pressures allowed companies to temper selling price increases. Consequently, output price inflation rose only marginally, hitting a 45-month low and remaining beneath its long-term average,” it said.
