New Delhi: Growth in India’s manufacturing sector slowed to a five-year low in August as weaker demand weighed on production, new orders and hiring, according to the latest survey.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) dropped to 52.8 in August from 53.5 in July, marking its third consecutive monthly decline.
A PMI reading above 50 indicates expansion, while a figure below 50 signals contraction.
Output and New Orders Lose Momentum
Manufacturing activity continued to expand, but at its weakest pace in five years. The output index fell to its lowest level since August 2021 as softer demand conditions affected production.
New orders also increased at their slowest pace in five years, with companies pointing to challenging market conditions and weaker demand for some products.
Export orders continued to rise, supported by demand from Australia, Germany, mainland China, Spain, Thailand and the US. However, international order growth also moderated from July.
Manufacturing Jobs Decline
Employment emerged as another weak spot, falling for the first time in two-and-a-half years. The decline was marginal, with manufacturers cutting jobs mainly because of lower business requirements.
Input cost pressures, meanwhile, eased despite higher expenses for materials such as steel and transportation. Overall input inflation fell to a six-month low.
Manufacturers also raised selling prices at a slower pace, with output price inflation easing to a 45-month low.
Business Confidence Improves
Despite weaker current conditions, manufacturers became more optimistic about the year ahead.
Business confidence recovered to a three-month high, with around 16% of surveyed companies expecting production to increase over the next 12 months.
The survey is compiled by S&P Global based on responses from around 400 manufacturers.