PMI Manufacturing slips to 55.5 in October

Manufacturing showed slightly subdued performance in October as the Purchasing Managers’ Index (PMI) slipped to 55.5 as against 57.5 in September, a report released by S&P Global Market Intelligence on Wednesday showed. Additionally, not all companies are going for fresh hiring.

“The survey’s new orders index slipped to a one-year low, as some firms raised concerns about the current demand picture for their products. Consumer goods were behind most of the slowdown, recording considerably softer increases in sales, production, exports, input inventories, and buying levels. Growth of all of the aforementioned variables was led by capital goods makers which, with the exception of new orders, registered accelerated rates of expansion,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

Manufacturing has a share of around 14 per cent in India’s Gross Value Added (GVA) and is considered a key source of employment.

The report released along with PMI highlighted that the present reading of the index showed an improvement in the health of the sector for the 28th month in a row. “The latest reading was above its long-run average of 53.9, but slipped from 57.5 in September to signal the slowest rate of expansion since February,” it said.

Job opportunities

On jobs, the report said that the rise in new businesses has continued to spur recruitment efforts among goods producers in India. “But with fewer than 4 per cent of companies hiring extra staff and 95 per cent leaving workforce numbers unchanged, the rate of job creation was slight and the slowest since April,” it said.

The October data pointed to sufficient capacity levels among Indian manufacturers as backlogs of work changed little since September. Concurrently, suppliers were often able to deliver inputs in a timely manner, with vendor performance being broadly stable.

Talking about prices, the report said price trends were “mixed”. Both input costs and output charges increased but inflation of the former accelerated while factory gate charges rose to a weaker extent. Listing materials which had shown a rise in prices, firms mentioned aluminum, chemicals, leather, paper, rubber and steel.

“We saw a further indication of broadly stable inflationary forces across the manufacturing industry. It appears that a moderate increase in input costs was simply passed on to clients. Nonetheless, qualitative evidence from the future output question revealed an interesting finding, as reports of rising inflation expectations were expected to dent demand and subsequently production growth over the course of the coming 12 months,” De Lima concluded.

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