In October, India’s manufacturing sector bounced back from a low point that was reached in September as strong demand drove growth in new orders and global sales.
In October, the HSBC India Manufacturing Purchasing Managers Index (PMI), compiled by S&P Global, rose to 57.5 from 56.5 in September, just like in August. Levels of recent peaks have followed a sequential growth trend to 58.1 in July, 58.3 in June, 57.5 in May, and 58.8 in April.
The final reading for October exceeded the initial flash estimate of 57.4 and indicated a strong momentum. The Purchasing Managers Index, or PMI, has remained persistently above its historical average and the 50-point expansion mark nearly three years, thus indicating that India’s manufacturing industry has been recording a sustainable growth rate.
An Acceleration in Growth
The survey revealed an expansion in manufacturing output saw a pace increase in October due to new orders and international sales growing faster. Inflation for materials, labor, and logistics led to input costs and selling prices rising, causing business expenses to rise.
“India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve. Rapidly expanding new orders and international sales reflect strong demand growth for India’s manufacturing sector,” said Pranjul Bhandari, chief India economist at HSBC.
“Meanwhile, input and output prices are both increasing as a result of persistent inflationary pressures in materials, labour, and transportation costs. To start the third fiscal quarter, business confidence is also very high due to expectations of continued strong consumer demand, new product releases, and sales pending approval,” Bhandari added.
Improved Demand Forecast
RBI forecasted FY25 GDP growth at 7.2% against 7% earlier, owing to better rural and urban demand and a rosy prediction for the monsoon .
RBI October bulletin put emphasis on the expected surge in demand due to the festival season and growing consumer optimism, with rural demand expected to gain even more as good agricultural production is likely to boost rural demand.
Export orders increased in October as they bounced back from the 18-month low seen in September. Exporters saw increased profits from markets in Asia, Europe, Latin America, and the US, as demand remained strong and favourable market conditions boosted sales.
The Goal of Reaching $10 Trillion
India targets an economy of $10 trillion in the following ten years based on growth in the manufacturing sector. Some of the sectors to focus will be semiconductors, electronics, electric vehicles, renewable energy, and defence. The government has increased its capital expenditure to enhance the infrastructure base, create employment, and spur manufacturing to meet such lofty goals.
Survey results also highlighted rising purchase volumes by manufacturers, with suppliers meeting demand comfortably.
“The latest results highlighted a further increase in quantities of purchase at manufactures, which suppliers were comfortably able to accommodate. Ongoing improvements in demand and expectations of further growth in the year ahead spurred growth in buying levels,” it said.
