PMI Manufacturing: India's manufacturing sector activity fell to an eight-month low in September due to slow growth in factory output, sales, and new export orders, a monthly survey showed on Tuesday. The HSBC India PMI Manufacturing index stood at 56.5 in September as against 57.5 in August. Under PMI, an index above 50 means expansion in production activity while a figure below 50 indicates contraction.

Why did the shortage occur

HSBC Chief Economist (India) Pranjul Bhandari said India's manufacturing sector slowed down in September after a very strong growth in the summer season. He said the slowdown in production and new orders and the slowdown in export demand growth were particularly evident as the new export orders PMI was the lowest since March 2023. According to the PMI data for September, manufacturing sector growth across India has declined marginally. The growth rate of factory output and sales has declined for the third consecutive month. Apart from this, international orders have grown at the slowest pace in one and a half years. On the price front, there was a moderate increase in the cost of raw materials and sales charges.

The effect of increased cost

Rising purchase prices, as well as higher labor costs and favorable demand conditions, led Indian manufacturers to raise their tariffs marginally in September. The overall level of business confidence fell to its lowest level since April 2023. About 23 percent of Indian manufacturers forecast an increase in production in the coming year, while the rest forecast no change. The HSBC India Manufacturing PMI is compiled by S&P Global based on responses to questionnaires sent to purchasing managers at a group of about 400 companies.