In August 2023, India's manufacturing sector demonstrated remarkable resilience, continuing its robust post-pandemic expansion, as reported by S&P Global. The seasonally adjusted India manufacturing purchasing managers index (PMI) came in at an impressive 57.5, slightly declining from July’s figure of 58.1.
However, this number remains significantly above the crucial threshold of 50, which delineates growth from contraction. Since October 2021, the PMI for India's manufacturing sector has consistently hovered near or above the 55 mark, signaling strong growth trends that have persisted throughout this period. Despite the domestic strength reflected in these numbers, factory managers within India indicated that export orders presented a mixed picture in August.
The report highlighted that new export orders increased at their weakest pace since the beginning of the 2024 calendar year. Notably, one-in-ten firms surveyed reported experiencing an improvement in their international sales, suggesting pockets of opportunity amidst the challenges faced globally. The demand for manufactured goods remained robust; however, manufacturers noted that input costs and the prices they charged moderated during August.
The increase in input costs showed a marked slowdown, leading manufacturers to ramp up their raw material purchasing to build safety stocks in anticipation of future needs. Alongside this adjustment in input costs, the pace of output price inflation decelerated as well, reflecting a careful balancing act by firms navigating fluctuating expenses and consumer demand. Supply chains within the manufacturing sector appear to be adapting well to current demands without significant disruptions, as per S&P Global’s insights.
This stability is crucial, as it allows manufacturers the flexibility needed to maintain production levels without the typical bottlenecks that can arise in times of increased demand. Amidst these operational adjustments, India’s manufacturers continued to expand their payrolls during August. However, there was a noted decline in overall sector confidence.
Competitive pressures coupled with inflation concerns have dampened business optimism, with panelists expressing their least optimistic sentiments since April 2023. Encouragingly, some factory managers reported proactive investments in plant and equipment aimed at boosting production capacity. According to the survey, certain panelists indicated that increased sales volumes, coupled with investments in technology, played a supportive role in sustaining production levels. The August PMI for India’s manufacturing sector was meticulously compiled by S&P Global from responses gathered from 400 manufacturers throughout the period of August 9 to August 23, providing a comprehensive snapshot of the industrial landscape at this time..