India’s manufacturing activity gained further momentum in October, supported by GST incentives, improved productivity, and increased investment in technology.
These factors helped accelerate the pace of new orders, which in turn lifted production and purchasing activity, according to a private survey released on Monday.
The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, climbed to 59.2 in October from 57.7 the previous month, close to the record 59.3 posted in August.
A PMI reading above 50 indicates growth in the sector, while any figure below that signals a decline. With the latest result, the index has remained in expansion territory for the 52nd consecutive month, Business Standard reports.
“New orders increased further at the start of the third fiscal quarter, with companies attributing growth to advertising, buoyant demand and the GST reform. Moreover, the pace of expansion was sharper and stronger than that recorded in September,” the survey said.
That said, most of the stronger sales activity was driven by domestic demand, as growth in new export orders slowed. Although overseas interest in Indian goods continued to rise, the latest increase was the weakest so far this year.
HSBC’s chief India economist, Pranjul Bhandari, noted that the manufacturing PMI picked up in October, with solid consumer demand supporting further gains in production, new business, and employment.
“Meanwhile, input prices moderated in October, while average selling prices increased as some manufacturers passed on additional cost burdens to end-consumers. Looking ahead, future business sentiment is strong due to positive expectations around GST reform and healthy demand,” Bhandari stated.
In terms of costs, the survey highlighted that manufacturers stepped up purchases of raw materials and semi-finished goods in October to support production and rebuild stock levels.
Buying activity grew at its quickest pace since May 2023. This increase was aided by a noticeable easing in input cost pressures. Overall expense inflation was mild, the softest in eight months and significantly lower than the long-term average.
“Despite receding cost pressures, the rate of charge inflation matched that registered in September and was therefore the joint-highest in 12 years. Survey participants indicated that demand strength was the key factor behind the current hike in output prices. Also, some firms suggested that greater outlays on freight and labour were transferred through to customers,” according to the survey.
Moreover, on employment, the survey showed that hiring continued for a 20th straight month in October. The pace of job creation remained moderate and largely unchanged from September. Capacity constraints across the sector stayed limited, as indicated by only a slight increase in backlogs of work. Companies reported that the modest rise in outstanding orders was primarily driven by persistent demand.
Looking ahead, manufacturers expressed confidence that GST improvements, ongoing capacity expansion, and stronger marketing initiatives will support future growth. They also expect demand to remain resilient and are hopeful that pending projects will soon receive approval.