In November, the manufacturing sector in India showed signs of recovery, rebounding slightly from the previous month’s low pace. The S&P Global India Manufacturing Purchasing Managers’ Index (PMI), adjusted for seasonal variations, increased from 55.5 to 56, signaling a marginal improvement. Despite this, the positive sentiment among companies dipped to its lowest level in seven months.
While new orders exhibited a better pace compared to the one-year low seen in October, the growth in export orders experienced a slowdown, reaching its lowest point since June. Despite this, Indian manufacturers responded by increasing production volumes, leading to a notable expansion in output, surpassing the trend pace.
Employment in the manufacturing sector continued to rise for the eighth consecutive month among the surveyed firms, albeit at a moderate rate. The boost in output was supported by a decrease in input cost inflation, reaching a 40-month low. Manufacturers also opted to raise output costs at the slowest rate in seven months.
Looking forward, surveyed companies maintained a positive outlook for future prospects in November. They saw opportunities stemming from robust demand, ongoing marketing initiatives, and the interest of new clients in a diverse range of products. However, overall positive sentiment weakened to a seven-month low due to rising inflation expectations.
Pollyanna De Lima, the economics associate director at S&P Global Market Intelligence, highlighted that although prices for raw materials increased in November, improved availability from suppliers, coupled with subdued global demand for inputs, contributed to a notable decrease in cost pressures. Yet, concerns about potential price hikes in the near term were reflected in the data for business sentiment.
De Lima also noted that sustained growth in new orders continued to have a positive impact on the sector’s job market, with recruitment witnessing a continual rise. Expanded capacities, increasing workloads, and the necessity to replenish finished goods’ stocks collectively indicated a robust state for India’s manufacturing economy as it nears the end of 2023. Expectations persist for a continued strong performance in 2024, as asserted by Ms. De Lima.