India's manufacturing sector picked up pace in October, with activity climbing to 57.5 from an eight-month low of 56.5 in September, reflecting a notable and faster improvement in operational conditions, according to data released by S&P Global on Monday.
A reading above 50 indicates growth and a score under 50 signals contraction.
The report indicated that output growth strengthened in October, driven by a quicker rise in both new domestic and international orders.
This increased production demand led to a greater need for raw materials, with suppliers effectively meeting these requirements on time. Manufacturers were also more inclined to hire additional staff, which, along with rising material costs, contributed to higher business expenses. The report further noted that both input costs and selling prices grew at faster rates, Financial Express reports.
“India’s headline manufacturing PMI (Purchasing Managers’ Index) picked up substantially in October as the economy’s operating conditions continue to broadly improve. Rapidly expanding new orders and international sales reflect strong demand growth for India’s manufacturing sector. Meanwhile, input and output prices are both increasing as a result of persistent inflationary pressures in materials, labour, and transportation costs. To start the third fiscal quarter, business confidence is also very high due to expectations of continued strong consumer demand, new product releases, and sales pending approval,” said Pranjul Bhandari, Chief India Economist at HSBC.
The uptick in performance was driven by heightened demand for Indian goods. “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,” the report stated.
The survey report also emphasised that new orders showed stronger growth compared to September's weakest increase in 18 months, with notable gains in contracts from regions including Asia, Europe, Latin America, and the United States.
The S&P Global report said: “Production volumes were ramped up to a greater degree in October, fuelled by faster increases in the consumer and investment goods categories. When explaining the latest upturn in output, companies remarked on demand buoyancy, positive sales pipelines and favourable market conditions.”
Furthermore, October's data indicated intensified inflationary pressures within India’s manufacturing sector.
Input price inflation reached a three-month high, though it remained below its long-term average.
In addition, output prices rose at a robust rate, surpassing the historical trend. Monitored firms identified freight, labour, and materials as primary drivers of these price pressures.