India’s manufacturing growth gains pace in October as domestic demand strengthens

India’s manufacturing activity expanded at a faster pace in October, supported by strong domestic demand even as export growth slowed, according to a business survey released on Monday.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.2 in October from 57.7 in September, surpassing the preliminary estimate of 58.4. A reading above 50 indicates expansion.

Output growth picked up to match the joint-strongest rate in five years, driven by steady demand, operational efficiency, new clients, and increased investment in technology.

However, export growth showed signs of cooling, with new export orders rising at their slowest rate in ten months, though the pace of expansion remained solid.

Input cost inflation eased to an eight-month low, but output charge inflation stayed near a 12-year high for the second consecutive month, as firms passed on higher freight and labour costs to customers.

“Robust end-demand fuelled expansions in output, new orders, and job creation. Meanwhile, input prices moderated in October while average selling prices increased as some manufacturers passed on additional cost burdens to end-consumers,” said Pranjul Bhandari, chief India economist at HSBC.

Employment increased for the 20th consecutive month, as firms hired to meet growing workloads, though the pace of job creation remained moderate and similar to September’s level.

The future output sub-index, which measures business confidence, dipped slightly from a seven-month high in September but remained strong overall.

“Looking ahead, future business sentiment is strong due to positive expectations around GST reform and healthy demand,” Bhandari added.

(With inputs from Reuters)