India’s manufacturing sector showed improved performance at the start of the third fiscal quarter, as per HSBC PMI data compiled by S&P Global. October saw an acceleration in output growth, driven by a faster rise in new orders, both domestic and international. Increased production needs prompted a rise in demand for raw materials, which suppliers were able to meet efficiently. Manufacturing firms also exhibited a greater willingness to hire additional staff, which, along with rising material costs, contributed to higher business expenses. Consequently, both input costs and selling prices rose at stronger rates.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 57.5 in October, up from September’s eight-month low of 56.5. This increase indicates a significant and accelerated improvement in operating conditions.
The sector’s performance benefited from stronger demand for Indian goods. Companies reported a faster expansion in order book volumes, exceeding the long-term average over the last 20 years of data. Growth in new export orders also strengthened after experiencing the slowest increase in 18 months during September. Firms attributed the improvement to new contracts from Asia, Europe, Latin America, and the United States.
October data also highlighted increased inflationary pressures in India’s manufacturing sector. Input price inflation rose to a three-month high, though it remained below its long-term average. Meanwhile, output prices increased at a pace above the series trend, reflecting solid growth.
Further data indicated an ongoing rise in purchasing activity among manufacturers, which suppliers were able to accommodate comfortably. The improvement in demand and positive outlook for future growth contributed to higher buying levels.
Manufacturers in India became more optimistic about future output levels, with positive sentiment rising since September, surpassing the long-term average observed in the 13-and-a-half-year history of the series.
Cover photo: Open AI
