India’s manufacturing sector continued to strengthen in October, primarily driven by festive demand, which was further supported by lower prices on a range of goods following the GST rate cuts in the previous month. This led to a significant increase in new orders, which in turn boosted output growth and purchasing levels, according to a private survey.

The HSBC Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.2 in October, up from 57.7 in September. This marks a continuation of growth, remaining just below the 18-year high of 59.3 recorded in August. A PMI reading above 50 signals expansion, and the figure has remained in the expansion zone for 52 consecutive months, indicating sustained manufacturing growth.

“New orders increased further at the start of the third quarter, with companies attributing growth to advertising, buoyant demand, and lower GST rates. Moreover, the pace of expansion was sharper and stronger than that recorded in September,” said Pranjul Bhandari, Chief Economist, HSBC India.

While demand increased across the domestic market, new export orders rose at a slower pace. The improvement in international demand was evident, though it was the least pronounced so far this calendar year.

On the cost side, manufacturers increased their purchasing of raw materials and semi-finished goods during the month to supplement production and build up inventories. Notably, purchasing levels rose at the fastest pace since May 2023. One factor supporting this growth was the softening of cost inflation. The rise in overall expenses was modest, marking the weakest increase in eight months, and well below the long-run average.

(Source: The New Indian Express)