Manufacturing rebounds in October on new orders, global sales

Manufacturing activity in India accelerated in October, fueled by faster increases in total new orders and international sales, a private survey showed.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from September’s eight-month low of 56.5 to 57.5 in October, indicating a substantial and accelerated improvement in operating conditions.

The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month and below 50 an overall decrease.

An increase in production requirements boosted demand for raw materials, with suppliers comfortably delivering inputs timely. Producers were also more willing to take on additional staff which, coupled with rising material costs, added to business expenses, the survey said.

“India’s headline manufacturing PMI 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,” Pranjul Bhandari, chief economist for India at HSBC, said.

“Input and output prices are both increasing as a result of persistent inflationary pressures in materials, labor, and transportation costs,” Bhandari said.

Last month’s factory output reflected demand buoyancy, positive sales pipelines and favorable market conditions. October results showed increase in quantities of purchases at manufacturers, which suppliers were comfortably able to accommodate. Ongoing improvements in demand and expectations of further growth in the year ahead spurred growth of buying levels, the survey said.

Companies that participated in the survey reported q quicker increase in order book volumes that was stronger than the average seen in nearly 20 years of data collection, the survey said. Companies reported introduction of new products and successful marketing initiatives helped enhance sales and performances.

After reporting weakest uptick in the span 18-month period during September, export orders showed stronger growth last month, with new contracts being signed from Asia, Europe, Latin America and the US.

The festive season boosted demand for consumer and investment goods category which led to production volumes getting ramped up to a greater degree.

Data showed that input price inflation quickened to a three-month high, but remained below its long-run trend. On the other hand, output prices increased at a solid rate that outpaced the series trend.

The HSBC India Manufacturing PMI® is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.