India’s manufacturing slowed in November

Mumbai, India – India’s manufacturing growth slowed in November, marking its weakest level in 11 months due to price pressures and softer domestic demand. The HSBC India Manufacturing Purchasing Managers Index (PMI), compiled by S&P Global, recorded a reading of 56.5 for November, down from 57.5 in October and matching September’s level. Although the PMI remained above the 50-point threshold indicating expansion, it was below the preliminary flash estimate of 57.3, reflecting a more subdued rise in factory orders and production.

The PMI has stayed above its long-term average for nearly three years, highlighting steady growth in India’s manufacturing sector. The survey, which gathers responses from about 400 manufacturers nationwide, provides a snapshot of the sector’s health. While new orders continued to grow in November, the pace of expansion was the second weakest in nearly a year. The survey noted that growth was supported by favorable demand conditions but hindered by fierce competition and price pressures.

Input costs rose at their fastest pace since July, driven by higher prices for chemicals, cotton, leather, and rubber. This increase in input costs led to the sharpest rise in output prices since October 2013, as manufacturers passed on additional freight, labor, and material costs to consumers. Despite domestic challenges, international demand surged, with new export orders reaching a four-month high in November. Indian manufacturers reported gains from markets including Bangladesh, China, Italy, Japan, and the US.

Pranjul Bhandari, chief India economist at HSBC, commented on the situation, stating that strong broad-based international demand, evidenced by a four-month high in new export orders, fueled the Indian manufacturing sector’s continued growth. However, the rate of output expansion is decelerating due to intensifying price pressures. Input prices for various intermediate goods, including chemicals, cotton, leather, and rubber, rose in November, while output prices soared to an eleven-year high as rising input, labor, and transportation costs were passed on to consumers.

The Reserve Bank of India (RBI) has maintained its FY25 GDP growth projection at 7.2%, pointing to strengthening rural and urban demand supported by a favorable monsoon forecast. In its October bulletin, the central bank highlighted a seasonal boost from the festival period and rising consumer confidence as key drivers of demand. Rural demand is expected to gain further traction, underpinned by robust agricultural output. Meanwhile, the HSBC survey underscored a notable rise in new export orders during November. With overseas demand gaining momentum, Indian manufacturers continued to ramp up production, leveraging favorable market conditions.