India’s Manufacturing Sector Shows Resilience Despite Price Pressures in November

New Delhi, December 2: India’s manufacturing sector continued to show resilience in November despite challenges posed by rising input costs and intense market competition. The HSBC India Manufacturing Purchasing Managers’ Index™ (PMI) stood at 56.5, down slightly from October’s 57.5 but still well above the long-term average, indicating sustained sector growth.

The robust expansion was driven by positive demand trends, with sales and output continuing to grow. However, escalating input costs—spurred by higher prices for chemicals, cotton, leather, and rubber—forced manufacturers to increase output charges at the sharpest rate since October 2013.

Pranjul Bhandari, Chief India Economist at HSBC, commented, “Despite a slight dip in the PMI, India’s manufacturing sector remains firmly in expansionary territory. Strong international demand, reflected in a four-month high for new export orders, continues to drive growth.”

She further noted, “Input price inflation intensified, with costs for intermediate goods and rising labour and transportation expenses being passed on to consumers, resulting in the steepest rise in output prices in 11 years.”

Domestic demand encountered challenges due to inflationary pressures, but international orders surged, reaching a four-month high. Indian manufacturers saw robust export demand from Italy, the UK, Bangladesh, China, and the US, demonstrating the sector’s ability to tap into global markets.

Employment in the sector expanded for the ninth consecutive month, as companies hired permanent and temporary workers to meet production demands. Though slightly slower than in October, job creation remained strong.

Input purchasing activity also reflected the sector’s optimism, with manufacturers building inventories to meet future demand. Although the pace of buying was the slowest in nearly a year, improved supplier performance and shorter delivery times supported manufacturing operations.

India’s manufacturing sector remains poised to navigate challenges as it balances domestic inflationary pressures with strong global demand.