India's manufacturing activity rebounds from 9-month low in October
India's manufacturing sector has staged a remarkable comeback, with the Purchasing Managers's Index (PMI) climbing to 57.5 in October. The PMI had hit a nine-month low of 56.5 in September. The survey was conducted by HSBC. The surge is mainly attributed to an increase in new orders and international sales, indicating strong growth within the sector and robustness of the Indian economy.
PMI maintains strong momentum for 10th consecutive month
The HSBC India Manufacturing PMI, a seasonally adjusted index, has remained above the 55-mark for 10 consecutive months. This shows strong momentum in the manufacturing sector. A PMI reading over 50 indicates expansion, further highlighting the sector's resilience and growth potential. The revival in manufacturing activity is a good sign for India's economy, which had slowed down in the past few months.
HSBC economist comments on PMI surge
Commenting on the PMI surge, Pranjul Bhandari, Chief India Economist at HSBC, said, "India's headline manufacturing PMI picked up substantially in October as the economy's operating conditions continue to broadly improve." Bhandari added, "Rapidly expanding new orders and international sales reflect strong demand growth for India's manufacturing sector," emphasizing the positive market response to India's manufactured goods.
Manufacturing sector's performance boosts business confidence
The improved performance of the manufacturing sector has also boosted business confidence. According to Bhandari, "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." This optimism is reflected in a survey of 400 manufacturers whose positive sentiment surpassed the average recorded over a 13-and-a-half year period.
Job market and inflationary pressures in manufacturing sector
The resurgence in manufacturing has also boosted the job market, with one-10th of survey participants reporting an increase in employment. However, this growth has come amid rising inflationary pressures. Input price inflation hit a three-month high in October while output prices also witnessed a significant increase. These factors highlight the complex economic dynamics at play within India's manufacturing sector.
Core industries and export performance show positive trends
Data released on October 30, showed a 2% rise in the index of eight core industries, which represent the infrastructure sector and have 40% weight in the index of industrial production. This is a major improvement from the 1.6% contraction witnessed last month. India's export performance also improved slightly with a 1% rise in merchandise exports compared to last year, over the first six months.
