BENGALURU: India’s manufacturing growth slowed to its weakest pace in five years in August as subdued demand weighed on new orders and prompted factories to cut jobs for the first time in more than two years, a private-sector survey showed.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 52.8 in August from 53.5 in July, slightly below a preliminary estimate of 52.9.
A reading above 50 indicates expansion, meaning the manufacturing sector continued to grow despite losing momentum.
India Manufacturing Demand Weakens
New orders increased at their slowest rate since August 2021, with manufacturers citing challenging market conditions and weaker demand for some products.
Export orders also continued to rise, although international demand growth eased compared with July.
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Factory output expanded at its slowest pace in five years, while employment declined marginally for the first time in 30 months, highlighting growing caution among manufacturers.
The slowdown came despite India’s economy expanding 7.8% year-on-year in the April-June quarter, exceeding expectations.
Cost Pressures Ease
Manufacturers received some relief from easing costs, with input price inflation dropping to a six-month low.
Companies consequently limited price increases, pushing output charge inflation to its weakest level in 45 months.
Despite weaker manufacturing activity, business confidence improved slightly to its highest level since May. However, overall sentiment remained subdued by historical standards as manufacturers continued to assess uncertain demand conditions.
