India's manufacturing sector growth slowed down in the month of August, amid softer increases in new business and output, albeit with rates of expansion remaining elevated by historical standards. Besides, business confidence retreated, but firms scaled up buying levels in a bid to safeguard against input shortages.
According to the survey report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased to 57.5 in August 2024 as against 58.1 in July 2024, but above its long-run average of 54.0, signaling a substantial improvement in operating conditions.
The report noted that new business rose sharply midway through the second fiscal quarter, but the pace of expansion eased to a seven-month low. Competitive conditions reportedly dampened growth. New export orders likewise increased at the weakest pace since the start of the 2024 calendar year. Although output continued to rise at a historically sharp pace, the rate of expansion moderated to the slowest since January.
On the price front, with input cost inflation receding, goods producers sought to rebuild safety stocks by purchasing additional raw materials and semi-finished goods. Despite the slowdown in cost pressures, there was a marked increase in prices charged for Indian goods in August. The rate of inflation was the second-fastest in close to 11 years. Firms reportedly shared additional cost burdens with their clients amid demand resilience.
Further, job creation softened midway through the second fiscal quarter as a few firms trimmed headcounts. Nevertheless, the overall rate of employment growth was solid in the context of historical data. Besides, competitive pressures and inflation concerns hampered business confidence in the reported month.
