India’s manufacturing growth slowed in August as output and sales grew at the slowest pace since January, while competitive pressures and inflation concerns weighed on business confidence, a monthly survey released on Monday showed.
what is the detail
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) stood at 57.5 in August, down from 58.1 in July. A PMI reading above 50 indicates expansion in production activity while a reading below 50 indicates contraction.
HSBC’s opinion
Pranjul Bhandari, Chief Economist (India), HSBC, said, “The Indian manufacturing sector continued to expand in August, although the pace of expansion slowed slightly. The main trends were seen in new contracts and production, although some traders attributed the slowdown to tough competition as a major reason.”
According to the survey, new business grew sharply in the second quarter of FY2024-25, but the pace of expansion slowed to a seven-month low. Similarly, new export orders grew at the slowest pace since the beginning of the 2024 calendar year. On the prices front, commodity producers benefited from easing cost pressures during August.
According to the survey, business confidence has declined to its lowest level since April 2023. Bhandari said, “The business outlook for the year has softened slightly in August due to competitive pressures and inflation concerns.” Meanwhile, according to government data released on Friday, India’s economic growth declined to 6.7 percent in April-June 2024-25. This is the lowest in 15 months. The main reason for this was the poor performance of agriculture and service sectors.
Gross domestic product (GDP) grew 8.2 percent in the April-June quarter. The HSBC India Manufacturing PMI is compiled by S&P Global based on responses to questions sent to purchasing managers at a group of about 400 companies.