Manufacturers cited demand strength, efficiency improvements, new clients and technology investments as factors driving higher production. Representational file image
| Photo Credit: SHIV KUMAR PUSHPAKAR

Photo used for representation purpose only.
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India’s private sector manufacturing activity rebounded to a six-month high in January after hitting a one-year low in December, thanks to exports recording their best month in almost 14 years even as factory order books expanded at the fastest pace since July 2024, as per a private index based on a survey of 400-odd firms.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from 56.4 to 57.7 in January, breaking a two-month streak of deceleration, with firms reporting buoyant demand even as they raised prices solidly but at the slowest pace in four months. A reading of over 50 on the index indicates a rise in activity levels.

While input cost pressures eased to an 11-month low, robust sales gains and upbeat forecasts prompted companies to recruit additional workers at a record pace in the first month of the fourth quarter of 2024-25. S&P Global which conducts the PMI survey, said job expansion levels were the greatest seen in nearly 20 years of data collection.

Companies ramped up production volumes at the fastest rate since last October and turned more optimistic about prospects for the coming year with nearly 32% firms expecting growth and just 1% projecting a contraction in output.

Firms stocked up on inputs at the greatest extent in three months, but finished goods inventories dipped for the second straight month due to “a mismatch” in demand growth and production volumes. The rate of stock depletion from factory warehouses was the steepest in nearly three years. Yet, capacity pressures remained mild at factories.

“Domestic and export demand were both strong, supporting new orders growth. Input cost inflation eased for a second month, relieving pressure on manufacturers to raise final output prices,” said Pranjul Bhandari, chief India economist at HSBC.

According to exchange data, equities worth ₹9,791.93 crore were sold by FIIs on Monday, September 30, 2024, while Domestic Institutional Investors DIIs purchased equities valued at ₹6,645.80 crore. File
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Benchmark indices Sensex and Nifty edged lower on Tuesday (October 1, 2024), extending the losing run to the third day amid profit-taking in oil & gas and select FMCG shares.

The BSE Sensex dipped 33.49 points or 0.04% to settle at 84,266.29. During the day, it hit a high of 84,648.40 and a low of 84,098.94.

The NSE Nifty closed marginally lower by 13.95 points or 0.05% to 25,796.90.

Muted trends in global markets and heavy foreign fund outflows weighed on investor sentiment, analysts said.

From the 30 Sensex firms, IndusInd Bank, Asian Paints, Hindustan Unilever, Tata Motors, Tata Steel, Titan, Reliance Industries and NTPC were among the major laggards.

Tech Mahindra, Mahindra & Mahindra, Kotak Mahindra Bank, Infosys, HCL Technologies and State Bank of India were among the major gainers.

In Asian markets, Tokyo settled higher. South Korea, Hong Kong and mainland Chinese markets are closed for a public holiday on Tuesday (October 1, 2024). Markets in mainland China will be closed for the rest of the week due to holiday.

European markets were trading on a mixed note. The U.S. markets ended in the positive territory on Monday (September 30, 2024).

Foreign Institutional Investors (FIIs) offloaded equities worth ₹9,791.93 crore on Monday (September 30, 2024), while Domestic Institutional Investors (DIIs) bought equities worth ₹6,645.80 crore, according to exchange data.

India’s manufacturing sector growth fell to an eight-month low in September amid softer increase in factory production, sales and new export orders, a monthly survey said on Tuesday (October 1, 2024).

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in August to 56.5 in September, registering the weakest pace of growth since January.

In PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

Global oil benchmark Brent crude declined 1.66% to $ 70.51 barrel.

The BSE benchmark tumbled 1,272.07 points or 1.49% to settle at 84,299.78 on Monday (September 30, 2024). During the day, it plunged 1,314.71 points or 1.53% to 84,257.14. The Nifty tanked 368.10 points or 1.41% to 25,810.85.

A worker makes a metal filter plate inside an industrial manufacturing unit on the outskirts of Ahmedabad.
| Photo Credit: Reuters

Growth in new orders and output eased slightly at Indian factories during July, even as firms raised selling prices at the highest pace in almost 11 years amid a significant spike in input costs that accelerated at a two-year high rate, as per the HSBC India Manufacturing Purchasing Managers’ Index (PMI).

The seasonally adjusted PMI inched down from 58.3 in June to 58.1 in July. A reading of over 50 on the index signals a rise in activity levels.

Also Read: June PMI signals manufacturing recovery, fresh hires at 19-year high

“The continuous increase in the output price index, driven by input and labour cost pressure, may signal further inflationary pressure in the economy,” averred HSBC chief India economist Pranjul Bhandari.

International sales grew at the second-fastest clip in over 13 years, with firms among the 400 entities surveyed for the index reporting stronger demand from clients in Asia, Europe, North America and the Middle Ease.

About 7% of surveyed firms reported an uptick in hiring, with both permanent and short-term hires taken on board, but 92% reported no change in staff head count. The pace of job creation dropped below June’s levels although this was still one of the strongest increases in hiring levels in the survey’s history, said S&P Global Market Intelligence, the firm that compiles the PMI.

Apart from a rise in costs of inputs like coal, leather, packaging, paper, rubber and steel, manufacturing firms also reported higher labour costs and strong demand as factors for raising output charges. At the same time, with new orders continuing to show robust growth, goods producers piled up on inputs in July, with a quarter of the surveyed firms reporting higher input stocking than June.

Despite key metrics’ persistent resilience, the overall level of positive sentiment towards the year-ahead outlook for production was broadly unchanged since June, when it had slipped to a three-month low. About 29% of firms had said they expected output to grow over the year ahead in June. The latest survey is silent on what this proportion was in July.

“India’s headline manufacturing PMI showed a marginal slowdown in the pace of expansion in July, but with most components remaining at robust levels, the small drop is no cause for concern,” Ms. Bhandari noted.

Image used for representational purpose.
| Photo Credit: Reuters

India’s factory activity levels dropped to a three-month low in May, with output levels easing due to the heat wave that led a reduction in working hours amid intensive heat and a rise in production costs that flared up to a level only experienced once over the previous 21 months, as per the HSBC India Manufacturing Purchasing Managers’ Index (PMI).

The seasonally adjusted index, that reflects an uptick in activity levels when its score is over 50, declined from 58.8 in April to 57.5 in May.

Also read | Industrial output slows to 4.9% in March

Fresh orders for factories moderated to the lowest level since February, with election-related disruptions and competition affecting domestic demand sources, even as export orders grew at the fastest pace in over 13 years, as per the findings of the survey-based PMI. Despite the moderation, new orders and output rose at a substantial pace, the index statement noted.

While input costs and output charges headed north, producers expressed the highest level of positive sentiment towards growth prospects in nearly nine-and-a-half years, partly based on expectations that economic and demand conditions will remain favourable. This optimism triggered a nearly 19-year high for job creation in factories surveyed by S&P Global for compiling the PMI.

“Ongoing strong sales performances combined with upbeat growth forecasts fuelled job creation in May. Manufacturing employment rose to one of the greatest extents seen since data collection started in March 2005,” the statement said.

Jobs growth, parallel to rising material and freight costs, underpinned a quicker increase in input costs at goods producers. The overall rate of inflation remained below its long-run average, but picked up to its joint-highest since August 2022,” the PMI release stated.

Reacting to the rise in operating expenses, firms raised own selling prices in May at a pace that was the fastest in eight months. However, this price hike only constituted part of the surge in production costs leading to a squeeze in margins for manufacturers, HSBC’s global economist Maitreyi Das pointed out.

“The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output. Panellists cited heatwaves as a reason for lower work hours in May, which may have affected production volumes,” Ms. Das said.

A reading of over 50 on the PMI, which rose from 56.5 in January to 56.9 last month, indicates an expansion in activity. File.
| Photo Credit: B. Velankanni Raj

India’s manufacturing sector continued its recovery in February from an 18-month low in December, with production levels and sales rising at the fastest pace in five months, as per the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI).

A reading of over 50 on the PMI, which rose from 56.5 in January to 56.9 last month, indicates an expansion in activity. New export orders grew at the highest pace in 21 months, but employment levels changed little as firms felt existing staff strengths were enough to cope with the workload.

“The upturn in manufacturing output was the strongest seen for five months and led by the capital goods category… [However] capacity pressures at goods producers in India remained mild [and] the uptick was softer than that registered in January,” a statement on the survey-based index noted.

Output price increases slowed down to their joint-weakest since March 2023, while input cost rose only fractionally at the weakest rate since July 2020.

“Qualitative evidence highlighted higher prices for iron, paper and plastics parallel to reductions for cotton and steel,” the statement said. About 8% of the surveyed firms which raised prices referred to the need to pass on higher freight, material and wage costs to clients.

Keeping in mind increased demand, firms tanked up on raw materials, lifting stocks of purchases at the fastest rate since August 2023.

“February survey data indicated sustained optimism among manufacturers regarding the year-ahead outlook for production. The overall level of confidence was the second highest since December 2022,” the PMI note concluded.

“Production growth continued to be strong, supported by both domestic and external demand. Manufacturing firms’ margins improved as input price inflation slipped,” said Ines Lam, economist at HSBC, attributing businesses’ optimistic outlook to these two factors.