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India's manufacturing PMI slipped to 52.8 in August, falling below its long-run average of 54.2 as output, and new orders slowed to five-year lows.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) noted that the seasonally adjusted index declined from 53.5 in July to 52.8 in August. The latest figures highlighted the weakest improvement in the health of the manufacturing sector in five years. The report linked the deceleration to "the weaker upturn to challenging market conditions and subdued appetite for some products", although consumer goods remained an exception. Pranjul Bhandari, Chief India Economist at HSBC, said, "India's final manufacturing PMI slipped to 52.8 in August, extending its decline for a third consecutive month." "The output index fell to its lowest level since August 2021, signalling that production is still expanding but at a markedly slower pace," she added. International demand also displayed signs of cooling. While manufacturers secured new export orders from regions including Australia, Germany, mainland China, Spain, Thailand, and the United States, overall international sales expanded at a slower rate compared to July. The reduced pace of incoming work directly influenced manufacturing employment, which contracted for the first time in two-and-a-half years. Although the decline remained fractional, businesses reducing payroll numbers attributed the change to lower overall operational requirements. "Employment edged into a mild contraction in August, the first decline after more than two years of job growth," Bhandari said. "While input cost pressures continued to ease, and manufacturers responded by raising selling prices more modestly." Purchasing activity expanded for the "sixty-second consecutive month", yet it did so at the weakest pace observed over this period. Finished goods inventories climbed for the second straight month because of slower sales, while the pace of pre-production stock accumulation moderated to its lowest level since April. Cost inflation softened during the month. While companies continued to report higher expenses for steel and transportation, overall input cost inflation fell to a six-month low. Consequently, output price inflation rose at its slowest rate in 45 months, with fewer than 7 per cent of monitored firms increasing their selling prices in an effort to remain competitive and protect order volumes. Looking ahead, business sentiment improved to its strongest point since May, though it remained subdued by historical benchmarks. Around 16 per cent of surveyed companies anticipated production growth over the next twelve months, while the remaining firms expected output levels to hold steady. (ANI)
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