India's Factory Growth Speeds Up in October, PMI Reveals
India manufacturing PMI rose to 57.5 in October from 56.5 in September, signaling a renewed acceleration in the country's factory activity after three consecutive months of slowdown. The improvement was supported by stronger domestic and international demand, rising new orders and increased business confidence.
The latest HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, also showed that output and new orders reached their highest levels in three months, while manufacturers continued to increase hiring.
India Manufacturing PMI: October Growth Highlights
"New orders and international sales growth indicate strong demand for India's manufacturing sector," Bhandari added.
Both output and new orders hit a three-month peak, signaling heightened demand, with international demand recovering from a previous low in September. Rising demand for Indian goods saw orders from regions like Asia, Europe, Latin America, and the U.S., boosting the outlook for the coming year.
"Business optimism is high, driven by expectations of sustained consumer demand, upcoming product launches, and pending sales approvals," Bhandari further noted.
With demand surging, companies ramped up hiring, marking the eighth consecutive month of employment growth. This trend may ease pressure on the government, which faces challenges in creating well-paid jobs for new workforce entrants. However, economists project moderate job creation over the next year, as per a recent Reuters survey.
Inflationary pressures rose, with input and output prices climbing. Input costs hit a three-month high due to increased material expenses, wage demands, and transportation fees, leading firms to pass these costs to clients more quickly than in September.
India's inflation reached 5.49% in September, nearing the RBI's 2-6% target range and primarily driven by rising food prices. Despite this, a recent Reuters survey indicated that a slim majority of economists expect the RBI to cut interest rates in December from the current 6.50% to 6.25%.
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