PMI shows dip in manufacturing in Nov

The news of a cooling manufacturing sector in November follows close on the heels of dismal 5.4 per cent growth in the second quarter of this fiscal. The HSBC final India manufacturing Purchasing Managers’ Index, compiled by S&P Global, declined to 56.5 in November from 57.5 in October. A preliminary estimate was far higher at 57.3.

The silver lining, though, was that the index was above the 50-mark, which distinguishes growth from contraction. It has been in the positive territory for three and a half years.

The output and new orders sub-indexes fell to their lowest and second lowest this year, respectively. Despite slower expansion due to competition and inflationary pressures, the upturn remained substantial on strong demand, a Reuters report said.

An uptick in demand from abroad was noticed for Indian-made goods. International demand rose at the fastest pace since July.

“Strong broad-based international demand, evidenced by a four-month high in new export orders, fuelled the Indian manufacturing sector’s continued growth”, noted Pranjul Bhandari, chief India economist at HSBC.

High demand and capacity expansion led to a robust rise in the business outlook for the year ahead, pushing the sub-index to a six-month high.

To accelerate production firms continued to hire, albeit at a slower pace than in October.

Inflationary pressures rose with both input and output prices edging up. While cost price inflation rose at its fastest since July, the increase in output prices was the most pronounced in over 11 years.

“Input prices for a variety of intermediate goods – including chemicals, cotton, leather, and rubber—rose in November, while output prices soared… as rising input, labor, and transportation costs were passed on to consumers,” added Bhandari.