September PMI signals slowing pace of manufacturing expansion

0

S&P Global India Manufacturing PMI slows to 55.1 from 56.2 in August, survey points to slight increase in employment as pressures on input costs ease to lowest level in two years

S&P Global India Manufacturing PMI slows to 55.1 from 56.2 in August, survey points to slight increase in employment as pressures on input costs ease to lowest level in two years

India’s manufacturing sector saw its slowest expansion in September since June, the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) showed, with the index falling to 55.1 from 56.2 in August.

A PMI above 50 indicates rising levels of business activity, and September marked the 15th consecutive month of growth in manufacturing activity.

New export orders rose for the sixth consecutive month, and at the fastest pace since May 2022, even as rising input costs fell at the slowest pace in nearly two years on the back of demand moderate global commodity prices and the risks of recession.

Indian producers responded to relief from commodity cost spikes by limiting increases in selling prices, pushing producer price inflation to a seven-month low, the survey-based PMI showed. Goods producers benefited from a weaker inflationary environment, with input costs rising at the slowest rate since October 2020 and only 8% of companies surveyed reporting higher purchase prices.

With inflation concerns subdued, businesses showed greater confidence in the outlook for the future, with the overall level of positive sentiment seen in September being the best in more than seven and a half years. However, currency risks and the impact of a weaker rupee on inflation and interest rates could derail optimism in October, said Pollyanna De Lima, associate director of economics at S&P Global Market. Intelligence.

“The latest PMI data set shows us that India’s manufacturing industry remains in good shape, despite considerable global headwinds and recession fears elsewhere. There were smaller, but substantial, increases in new orders and production in September, with some leading indicators suggesting that production should increase further, at least in the short term, as companies seek to honor sales contracts and replenish inventories,” she said.

The continued increase in new work and efforts to boost production in September spurred job creation, which rose at the fastest pace in three months “albeit slightly overall,” S&P Global noted.

While all major manufacturing segments recorded expansion, the capital goods sector recorded the strongest growth in new orders, international sales and production.

September marked the third consecutive month of improvement in the business climate. In August, when the PMI hit its highest level since November 2021, producer optimism had reached a six-year high.

To cope with higher sales and larger production needs, manufacturers also acquired more inputs after companies dug deep into inventory in September, S&P Global said.

“Finished goods inventories fell at the fastest rate since February. Sustained growth in input purchases supported businesses in their efforts to increase pre-production inventories in September. The rate of inventory accumulation has been strong and accelerated from August,” S&P Global said. However, supplier performance showed “marginal deterioration” after improvements in each of the previous three months.

Share.

About Author

Comments are closed.