India’s manufacturing sector suffered a setback in November. A monthly survey report released on Monday said the manufacturing sector growth rate fell to a combined 11-month low of 56.5 in November. According to PTI news, this has happened due to competitive conditions and inflationary pressures. Growth in factory orders slowed. The survey report said the HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell to 56.5 in November from 57.5 in October.
meaning of pmi
According to the news, in PMI language, a print above 50 indicates expansion, while a score below 50 indicates contraction. HSBC Chief India Economist Pranjul Bhandari said India recorded a manufacturing PMI of 56.5 in November, slightly lower than the previous month, but still within the expansionary zone. Bhandari said strong broad-based international demand, evidenced by a four-month high in new export orders, fueled the continued growth of the Indian manufacturing sector. However, at the same time, the rate of output expansion is slowing due to increasing price pressures.
India’s economic growth declined in July-September quarter
On the domestic macroeconomic front, the latest government data released on Friday showed that India’s economic growth slowed to a near two-year low in the July-September quarter of this fiscal due to poor performance by the manufacturing and mining sectors as well as weak consumption. The level came down to 5.4 percent. The survey report said expansion in sales and output in the manufacturing sector during November was largely supported by positive demand trends, although growth was somewhat limited.
Input prices increased in November
Bhandari said input prices of several intermediate goods, including chemicals, cotton, leather and rubber, rose in November, while output prices reached an 11-year high as the burden of rising input, labor and transportation costs passed on to consumers. India’s retail inflation reached a 14-month high of 6.21 percent in October. This is above the RBI’s tolerable band mainly due to increase in food prices. In September it was 5.49 percent. The challenge before the RBI is to keep inflation at 4 percent (+/- 2 percent).
Growth rate in international demand is the best in four months
The survey said the rate of growth in international demand was the best seen in four months, with panelists reporting gains from Bangladesh, mainland China, Colombia, Iran, Italy, Japan, Nepal, the UK and the US. With demand conditions remaining favourable, Indian manufacturers continued to increase production. Factory employment in India increased for the ninth consecutive month in November. The HSBC India Manufacturing PMI was compiled from responses to a questionnaire sent by S&P Global to purchasing managers at a panel of approximately 400 manufacturers.
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