Manufacturing PMI surged to 57.5 in October

India’s headline manufacturing PMI picked up substantially in October as the economy’s operating conditions continue to broadly improve. The seasonally adjusted HSBC India PMI, rose to 57.5 in October from 56.5 in September.

India’s manufacturing activity, as indicated by the HSBC India Manufacturing Purchasing Managers’ Index (PMI), saw an increase in October. According to the data released by S&P Global, India’s manufacturing sector showed renewed strength in October, with the PMI rising to 57.5 from September’s eight-month low of 56.5, indicating a faster pace of improvement. This increase reflects a substantial improvement in operating conditions, driven by faster growth in new orders and international sales. Stronger demand for Indian goods boosted production needs, which in turn raised demand for raw materials. Suppliers were able to meet these requirements efficiently, ensuring smooth operations.

The rise in orders, including those from regions like Asia, Europe, Latin America, and the United States, marked an uptick from the slower growth seen in September. As per the report, “Companies noted a quicker increase in order book volumes that was stronger than the average seen in nearly 20 years of data collection. Anecdotal evidence suggested that the introduction of new products and successful marketing initiatives helped enhance sales performances.” 

Manufacturers also expanded their workforce more substantially than in the previous month to support the heightened production demands. However, inflationary pressures intensified. The Input price inflation reached a three-month high, though it remained below its long-term trend. Additionally, output prices rose at a strong rate, exceeding the series trend. 

Businesses faced increased costs for freight, labor, and materials, which contributed to stronger input price inflation. As a result, companies raised their selling prices at a rate surpassing the historical trend. This sustained demand, combined with rising expenses, led to higher operating costs and a willingness among producers to pass on some of these costs to customers.

In PMI terms, a reading above 50 indicates expansion, while a score below 50 suggests contraction. The seasonally adjusted HSBC India PMI, was compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.