Manufacturing activities in India continued to show resilience in October, even as global factory output weakened amid widespread recession fears and persistent inflationary pressures.
The seasonally-adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) for India inched up to 55.3 from 55.1 in the previous month, according to data released on Tuesday. In contrast, the UK’s manufacturing sector shrank at its fastest rate since mid-2020 in October and major Asian economies including Japan, South Korea, Taiwan and Malaysia exhibited weakness, highlighting the pain from slowing Chinese demand and stubbornly high import costs.
Manufacturing PMI due on Wednesday for the Euro Zone too is likely to show an ongoing downturn deepened in October, Reuters reported.
In India, however, both factory orders and production rose strongly in the month, despite losing growth momentum, Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, noted.
The corresponding index for services for September had declined to 54.3 from August’s 57.2, which represented the weakest expansion in the sector in six months, as the growth in both output and new orders slowed. Inflationary pressures and competitive conditions had dented services activities in September.
Official data had showed on Monday that eight core infrastructure industries grew 7.9% in September, against a revised rate of 4.1% in the previous month, which was a seven-month low. The improved performance was on account of decent growth in the production of cement, coal and electricity.
The October manufacturing PMI data pointed to an improvement in overall operating conditions for the 16th straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.
Firms were able to secure additional work in October, taking the current sequence of growth to 16 months, the survey said, adding that overall, factory orders increased at an above-trend pace that was nonetheless the weakest since June.
Looking ahead, Indian manufacturers remained confident of a rise in production volumes by October 2023. Predictions of better sales and marketing efforts were among the reasons cited for upbeat projections.
“Manufacturers continued to loosen the purse strings as they expect demand buoyancy to be sustained in coming months. There was a marked rise in input purchasing, with firms adding to their inventories to better align with client purchasing. Capacities were again expanded to accommodate for improving sales,” Lima said.
On the inflation front, cost burden rose at a broadly similar rate to September’s 23-month low, while selling charge inflation moderated to the weakest since February, as per the survey.
On the employment front, there were signs of substantial capacity pressures with Indian goods producers, as outstanding business volumes rose to the greatest extent in almost two years. Some firms responded to this by hiring extra workers. “Manufacturing employment increased at a marked rate that was one of the strongest since data collection started in March 2005,” the survey said.
“Consumer goods were the best-performing category in October, recording the greatest performances for output, total sales and exports. Growth for all of the aforementioned areas was sustained in the intermediate and investment goods sub-sectors, albeit with slowdowns since September,” Lima said.
(With agency inputs)