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India Mfg Slumps: Growth Hits 5-Year Low
1 Sep
Summary
- Manufacturing PMI fell to 52.8 in August, its lowest since August 2021.
- Slower demand led to the weakest output and new order growth in five years.
- Sector employment declined for the first time in two-and-a-half years.
India's manufacturing sector has experienced a significant slowdown, with August marking its lowest growth rate in five years. The HSBC India Manufacturing Purchasing Managers' Index (PMI) moderated to 52.8, down from 53.5 in July, indicating a loss of momentum as both output and new orders saw their slowest growth in half a decade.
Softening demand conditions were cited as the primary driver behind this downturn. This led to weaker increases in purchasing activity and inventory levels. For the first time in two-and-a-half years, employment in the sector saw a fractional decline. Despite facing higher costs for materials like steel, manufacturers limited price increases, with output charge inflation at a 45-month low.
Despite the current challenges, business expectations for the next 12 months have strengthened, reaching their highest mark since May. Manufacturers noted export gains to countries including Australia, Germany, mainland China, Spain, Thailand, and the US. However, overall new business expansion slowed considerably, attributed to challenging market conditions.
