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India manufacturing growth falls in September as exports at slowest pace in year and a half
New export orders lowest since March 2023.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in August to 56.5. September, as it recorded the lowest new export orders since March 2023.
Notably, international orders increased at the slowest pace in a year-and-a-half. Despite this loss of growth momentum, the net employment and quantities of purchases rose, while business confidence was broadly aligned with its long-run average.
There were moderate increases in input costs and selling charges on the price front.
“Momentum in India’s manufacturing sector softened in September from the very strong growth in the summer months. Output and new orders grew at a slower pace, and the deceleration in export demand growth was especially evident as the new export orders PMI was the lowest since March 2023,” said Pranjul Bhandari, chief India Economist at HSBC.
Input prices increased at a faster rate in September while factory gate price inflation eased, reinforcing the compression on manufacturers’ margins.
Pranjul stressed that weaker profit growth might have an impact on companies’ hiring demand, as the pace of employment growth slowed for a third month.
Positive demand trends, successful advertising and favourable client interest were featured as the main determinants of sales growth amongst the qualitative part of the survey. The increase was substantial but slowest in 2024 so far was reportedly halted by fierce competition.
A softer increase in new export orders also limited total sales growth. The rate of expansion was moderate and the least pronounced in a year and a half.
Factories continued to produce goods at a stronger pace outpacing the long-run series average. With growth softening in the consumer and capital goods segments whilst steadying at intermediate goods makers, the overall rate of expansion retreated to an eight-month low.
Cost pressures ticked higher in September due to increased chemical, packaging, plastic and metal prices. Historically, however, the rate of inflation was mild.
