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The seasonally adjusted PMI for August stood at 57.5, down from July’s 58.1, the data released by S&P Global showed on Monday.
In August 2023, the seasonally adjusted HSBC Index for manufacturing PMI was 58.6.
Indian manufacturers reported a softer increase in new business and production. The rate of growth was the slowest since January 2024. The shift is attributed to the changing consumer preferences and competitive pressures.
New export orders grew at the weakest pace since the beginning of 2024, said the report by S&P Global.
The rate of input price inflation slowed to its lowest in five months, which enabled manufacturers to bolster pre-production inventories. This inventory growth was among the strongest recorded in the past 19 years.
Despite the easing cost pressures, firms continued to pass on additional costs to clients, resulting in the second-fastest rate of charge inflation in nearly 11 years.
Business confidence dipped in August, with concerns over competitive pressures and inflation weighing on the outlook. The level of optimism was the lowest since April 2023.
Pranjul Bhandari, Chief India Economist at HSBC, commented, “The Indian manufacturing sector sustained its growth trajectory in August, although the momentum has eased slightly. Firms are facing intensified competition, which has tempered the expansion in new orders and output.”
However, the softening of input costs is a positive development, allowing companies to build safety stocks and maintain margins. Looking ahead, competitive and inflationary pressures will likely shape the business landscape, Bhandari added.
A PMI reading above 50 indicates expansion in the manufacturing sector, while a reading below 50 suggests contraction.
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