India's Manufacturing Growth Eases In August As Demand Weakens

New Delhi, Sep 2 (KNN) India's manufacturing sector experienced a slowdown in August, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) declining to 57.5 from July's 58.1, primarily due to weakening demand.

Despite this dip, the index remained comfortably above its long-term average of 54.0, indicating continued improvement in operating conditions and sustained expansion in the sector.

"The manufacturing sector in India continued to grow in August, though at a slightly reduced pace. New orders and output followed this trend, with some participants attributing the slowdown to heightened competition," noted Pranjul Bhandari, Chief India Economist, HSBC.

The survey revealed that while new business surged throughout the second quarter of the fiscal year, the rate of growth slowed to a seven-month low.

Similarly, new export orders expanded at their slowest pace since the beginning of 2024. However, manufacturers benefited from easing cost pressures during August.

"The rise in input costs slowed considerably, enabling manufacturers to increase their raw material purchases and build safety stocks," Bhandari said.

He added that while the pace of output price inflation also decelerated, the reduction was less pronounced, resulting in improved profit margins for manufacturers.

The survey further highlighted a moderation in job creation during the middle of the second fiscal quarter, with some firms reducing their workforce.

Nevertheless, overall employment growth remained solid in the context of historical trends.

"Looking ahead, the business outlook for the year moderated slightly in August, driven by competitive pressures and concerns over inflation," Bhandari stated.

In parallel, India's economic growth slowed to a 15-month low of 6.7 per cent in the April-June quarter of the 2024-25 fiscal year, down from 8.2 per cent in the same period the previous year.

This slowdown was largely due to the underperformance of the agriculture and services sectors, according to government data released on Friday.

(KNN Bureau)