EconomyIndustry
Factory growth eases to 54.7 in October, but export orders hit six-month high
The final HSBC manufacturing PMI came in below both September's 55.1 and the flash estimate of 54.9, as output growth slowed and hiring stayed weak, while foreign orders picked up and price pressures cooled.
Key points
- The HSBC India Manufacturing PMI fell to 54.7 in October from 55.1 in September.
- New export orders grew at a six-month high, led by buyers from the US, UK and the Gulf.
- Selling price rises were the weakest in nearly four years.
India’s factories grew a little more slowly in October, according to the final HSBC purchasing managers’ survey released on Monday morning, though orders from abroad rose at the fastest pace in six months.
The HSBC India Manufacturing PMI, compiled by S&P Global, slipped to 54.7 from 55.1 in September. That is also a touch below the earlier flash estimate of 54.9. A reading above 50 means activity is growing, and the index remains above its long-run average.
“India’s manufacturing PMI softened to 54.7 in October from 55.1 in the previous month,” said Pranjul Bhandari, chief India economist at HSBC. “Strong international demand pushed growth of new export orders to a six-month high.”
Exports up, hiring flat
Firms reported more orders from at least ten countries, including the US, the UK, the UAE, Saudi Arabia, Oman, Canada, Bangladesh, Indonesia, Nepal and Sri Lanka. Total new orders grew a shade more slowly than September’s seven-month high but stayed sharp. Output growth moderated, mainly because makers of intermediate goods expanded more slowly.
Hiring rose for a second month, but only marginally, and capital goods producers cut jobs. Business confidence fell and stayed below its long-run average, with about 18% of manufacturers expecting output to rise over the next year.
Prices cool, stocks build up
The softer side of the survey was on prices. Input cost inflation fell to its lowest level since February, and selling price rises were the weakest in nearly four years. Bhandari said overall “input and output price pressures eased slightly from the previous month.”
Companies also piled up stocks. Finished goods inventories rose at an unprecedented pace and input stocks at the fastest rate in eight months, as producers were “building precautionary buffers to mitigate potential shortages,” Bhandari said.