According to a private study, October saw India’s industrial development slow down for the second consecutive month as demand declined. This, combined with higher raw material costs, affected business confidence.
A brief about October sees a decline in manufacturing as demand decreases
S&P Global’s Manufacturing Purchasing Managers’ Index fell to an eight-month low of 55.5 in October from 57.5 in September, defying Reuters pollsters’ forecasts for an increase to 57.7.
That was, nevertheless, the 28th month in a row that the index was above the 50-point threshold that separates expansion from contraction.
Demand during the holidays would boost the economy, but not enough to accelerate the growth of what is already the fastest-growing major economy in the world, according to a recent Reuters poll.
In October, “India’s manufacturing sector generated substantial growth, despite a challenging global economic environment,” said S&P Global Market Intelligence associate director of economics Pollyanna De Lima.
“Still, insights from surveyed purchasing managers pointed to the deceleration of several measures.”
The consumer goods category was the key driver of the decline.
Demand growth stalled once more, as the new orders sub-index dropped to its lowest level in a full year. International demand growth dropped to a four-month low.
October saw a decline in business confidence due to worries about inflation and demand. The sub-index for future output reached a nine-month high in September, but then declined to its lowest point since May.
The rate of increase in selling prices slowed last month, while input prices increased somewhat, forcing businesses to pass along some of the additional expenses to customers.
“Qualitative evidence from the future output question revealed an interesting finding, as reports of rising inflation expectations were expected to dent demand and subsequently production growth over the course of the coming 12 months,” De Lima said.
According to the most recent Reuters survey, inflation is predicted to average 5.5% during this fiscal year, which ends in March 2024, and then decrease to an average 4.8% in fiscal 2025.
According to Reuters poll medians, India’s central bank was predicted to keep its repo rate at 6.50% until at least mid-2024, with the first 25 basis point reduction anticipated to occur in the July–September quarter.
