November PMI at 56.5 as India's manufacturing growth shows signs of strain

HSBC final India Manufacturing PMI for November matches September's eight-month low of 56.5

Manufacturing activity in India slowed in November, with the Purchasing Managers’ Index (PMI) falling to 56.5, down from 57.5 in October. According to the HSBC Final India Manufacturing PMI, compiled by S&P Global, the November figure was 56.5, matching September's level and marking an 11-month low.

 

An earlier flash PMI survey by HSBC had indicated a PMI of 57.6 for November, which was revised to 57.3 on Monday morning. However, the final data came in significantly below these estimates. 

Commenting on the PMI, Pranjul Bhandari, chief India economist at HSBC, said: "India recorded a 56.5 manufacturing PMI in November, down slightly from the prior month, but still firmly within expansionary territory. Strong broad-based international demand, evidenced by a four-month high in new export orders, fuelled the Indian manufacturing sector’s continued growth. At the same time, however, the rate of output expansion is decelerating due to intensifying price pressures."

 

 

"Input prices for a variety of intermediate goods — including chemicals, cotton, leather, and rubber — rose in November, while output prices soared to an eleven-year high as rising input, labour, and transportation costs were passed on to consumers," Bhandari added.

 

Q2 GDP growth slowdown

 

India’s real GDP growth declined to a seven-quarter low of 5.4 per cent in July–September 2024, significantly below the 6.7 per cent growth in the previous quarter and 8.1 per cent in the same period in 2023. This was also far below the estimated 6.5 per cent. The slowdown was largely attributed to weaker manufacturing growth and a contraction in mining and quarrying.

• Manufacturing GVA: Grew by just 2.2 per cent, a sharp drop from 7 per cent in Q1 and 14.3 per cent in Q2 last year.
• Mining and Quarrying: Contracted by 0.1 per cent, compared to 7.2 per cent growth in Q1 and 11.1 per cent in Q2 2023.

 

RBI’s MPC meet this week

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will meet from December 4 to 6 to review interest rates. The repo rate has remained unchanged at 6.5 per cent since February 2023 as the central bank balances economic growth with inflationary concerns.

 

According to a Business Standard poll, the RBI is expected to keep the repo rate steady. However, respondents anticipate that the central bank will lower its growth projection from 7.2 per cent and revise its inflation forecast upward from 4.5 per cent.