India’s manufacturing PMI falls to 56.5 in November

Manufacturing growth eased in November, with the Purchasing Managers’ Index (PMI) falling to an 11-month low of 56.5 from 57.5 in October, amid price pressures and weaker demand. Although price pressures curbed domestic sales to a certain extent, growth of new export orders gained momentum, the report by S&P Global stated.

India’s manufacturing activity slowed in November, with the Purchasing Managers’ Index (PMI) dropping to an 11-month low of 56.5, compared to 57.5 in October, according to S&P Global. While the sector’s growth remained above its long-term average, most subcomponents experienced downward movements.

According to Pranjul Bhandari, Chief India Economist at HSBC, “India recorded a 56.5 manufacturing PMI in November, down slightly from the prior month, but still firmly within expansionary territory.” 

He explained, “Strong broad-based international demand, evidenced by a four-month high in new export orders, fueled the Indian manufacturing sector’s continued growth. At the same time, however, the rate of output expansion is decelerating due to intensifying price pressures. Input prices for a variety of intermediate goods — including chemicals, cotton, leather, and rubber — rose in November, while output prices soared to an eleven-year high as rising input, labour, and transportation costs were passed on to consumers.”

Demand trends, according to the survey report accompanying PMI, continued to support robust expansions in sales and output, though growth was somewhat limited by competitive pressures and rising costs. Input cost inflation, driven by increased freight, labor, and material expenses, reached its highest level since July, prompting manufacturers to implement the steepest rise in selling prices in over 11 years.

Despite some impact on domestic sales due to price pressures, new export orders gained momentum marking the strongest growth in four months, according to the report. Notable export markets included Bangladesh, China, Colombia, Iran, Italy, Japan, the UK, and the US. 

Indian manufacturers continued to scale up production amid favorable demand conditions, although the expansion rate slowed to its weakest level this year while remaining historically strong. Factory employment in India increased for the ninth straight month in November, according to S&P Global. While the pace of hiring eased slightly from October, it remained robust, with companies adding both permanent and temporary staff.