PMI slips to 56.5 but remains firmly in expansionary territory

New Delhi [India], December 2 : India's manufacturing sector demonstrated resilience in November despite headwinds owing to price pressures and fierce competition.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index™ (PMI) stood at 56.5, down from October's 57.5, marking a joint 11-month low. However, the figure remained well above the long-run average, signalling sustained expansion in the sector.
A positive demand trend underpinned expansion in sales and output. However, competitive market dynamics and escalating costs moderated the pace of growth.
Input cost inflation, driven by higher prices for chemicals, cotton, leather, and rubber, grew to its highest level since July, compelling manufacturers to raise output charges at the steepest rate since October 2013.
Pranjul Bhandari, Chief India Economist at HSBC, said, "India recorded a 56.5 manufacturing PMI in November, down slightly from the prior month, but still firmly within expansionary territory. Strong broad-based international demand, evidenced by a four-month high in new export orders, fuelled 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," he added.
Domestic sales growth faced hurdles due to inflationary pressures, yet international demand surged to a four-month high. Export orders saw robust growth from countries like Italy, UK, Bangladesh, China, and the US, as Indian manufacturers capitalized on global demand.
The manufacturing sector continued to expand its workforce for the ninth consecutive month. Despite softening from October levels, job creation remained robust, with employers hiring both permanent and temporary staff to support production needs.
Meanwhile, input purchasing remained strong, reflecting manufacturers' efforts to build inventories and prepare for future demand. Although the pace of buying slowed to its weakest in nearly a year, manufacturers benefited from improved supplier performance and shorter lead times.