Festive cheer and GST cuts power India’s manufacturing surge in October - The New Indian Express

MUMBAI: The manufacturing sector continues to strengthen, driven primarily by festive demand, which received a boost from lower prices for a host of goods following the GST rate cuts in the previous month. This led to a faster increase in new orders, boosting output growth and purchasing levels in October, according to a private survey.

The headline HSBC Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.2 in October from 57.7 in September. The figure remains only marginally below the record high of 59.3 in August, which marked an 18-year peak, the British bank said on Monday.

A reading above 50 in the PMI survey indicates an expansion in activity, while a reading below 50 signals contraction. The headline figure has now remained in the expansion zone for 52 consecutive months.

“New orders increased further at the start of the third quarter, with companies attributing growth to advertising, buoyant demand, and lower GST rates. Moreover, the pace of expansion was sharper and stronger than that recorded in September,” the survey said, quoting HSBC India Chief Economist Pranjul Bhandari.

However, the demand uptick was driven mostly by the domestic market, as new export orders increased at a softer rate. The latest improvement in international demand was marked, though the least pronounced so far this calendar year.

Bhandari said, “The manufacturing PMI accelerated in October as robust end-demand fueled expansions in output, new orders, and job creation. Meanwhile, input prices moderated in October, while average selling prices rose as some manufacturers passed on additional cost burdens to end-consumers. Looking ahead, future business sentiment is strong due to positive expectations around GST cuts and healthy demand.”