India's manufacturing PMI expands to 59.2 in Oct from 57.7 in Sep buoyed by GST relief

The improvement reflects a quicker pace of growth in the health of the sector, supported by GST relief, productivity gains, and increased technology investments.

The HSBC India report stated, "The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) - a single-figure indicator of sector performance - was up from 57.7 in September to 59.2 in October, indicating a quicker improvement in the health of the sector".

It highlighted that manufacturing conditions continued to strengthen through October as domestic demand remained robust. A faster increase in new orders boosted both output and purchasing activity, leading to a near-record expansion in input inventories.

However, external sales saw slower momentum, rising at the weakest pace in ten months, indicating that the main driver of growth was the domestic market.

According to the data, the improvement in sales growth was primarily due to stronger local demand, as new export orders increased at a softer pace. Although international demand for Indian goods continued to rise, the growth rate was the least pronounced so far this calendar year.

Manufacturers continued to purchase additional raw materials and semi-finished goods during the month, aiming to support production and build up inventories. Buying levels expanded at the fastest pace since May 2023, showing confidence among producers in continued demand.

Despite stronger demand, capacity pressures remained mild, with only a slight rise in outstanding business volumes. Companies attributed the modest backlog increase mainly to demand strength rather than production delays. Suppliers were largely able to dispatch inputs efficiently, leading to a moderate shortening in delivery times, the most pronounced improvement in four months.

Holdings of raw materials and semi-finished items increased at the second-fastest rate since data collection began in March 2005, only behind May 2023. Finished goods inventories also rose, though marginally, as many firms fulfilled sales from existing stockpiles.

Looking ahead, the report mentioned that the manufacturers remain optimistic about future growth. The outlook is supported by expectations of benefits from GST reform, capacity expansion, and marketing initiatives.

Firms also expect demand resilience and anticipate that pending contracts will be cleared, further bolstering production momentum in the coming months. (ANI)