In September, India’s manufacturing sector saw a notable slowdown, reaching a five-month low, as reported by the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI). This index slipped to 57.5 from 58.6 in August, indicating a deceleration in activity. A PMI reading of 50 represents no change in activity levels.
New Orders Decline:
One of the key factors contributing to the slowdown was a decrease in new orders during September, compared to the previous month.
Inflation and Output Charges:
While input cost inflation reached its lowest point in over three years, firms raised their output charges at a pace higher than the long-run average. This decision may potentially impact future sales prospects. Firms attributed the price hikes to increased labor costs, optimistic business confidence, and robust demand observed in September.
Export Orders:
Although the growth of new export orders softened from August’s nine-month high, it remained at a sharp level. Firms reported gaining new business from clients across Asia, Europe, North America, and the Middle East.
Output Growth Slows:
The output from factories grew at the slowest rate in five months but remained above the long-term average.
Optimism for the Future:
Despite the slowdown in various aspects of manufacturing activity, firms expressed the highest level of optimism regarding their business prospects for the year ahead in 2023.
Employment Growth:
This increased optimism prompted a surge in employment growth compared to August, with the pace of employment growth being considered strong by historical standards.
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