Data from S&P Global on Monday indicated that although India’s manufacturing activity decreased to 57.5 in August from 58.1 in July, it was still higher than its long-term average of 54.0, indicating a significant improvement in operating conditions.
August saw weaker gains in new business and output from Indian manufacturers, albeit their rates of expansion were still high by historical standards. According to the HSBC analysis, companies increased their purchasing levels as a precaution against shortages of inputs, even as business confidence decreased. It stated that the most recent increase in pre-production inventories was among the largest in the data set’s 19 and a half years, but it insisted that a reduction in cost pressures was one of the factors boosting the increase in purchasing activity.
Input price inflation slowed to its lowest point in five months. At the same time, demand resilience allowed businesses to raise selling prices and easily absorb increased costs with their customers.
Additionally, the rate of rise in new export orders was the slowest since the beginning of the 2024 calendar year. However, ten percent of businesses reported an increase in foreign sales, which they attributed to increased demand from the US, Europe, Asia, and Africa.
The rise in input costs has, thankfully, slowed down somewhat. To establish safety stocks, manufacturers expanded their purchasing activities for raw materials. The rate of inflation of product prices slowed down in tandem with input costs, although it did so much more slowly, giving manufacturers more margins. August saw a minor slowdown in the business outlook for the upcoming year due to concerns about inflation and pressure from competitors.
It was the second-fastest inflation rate in nearly 11 years. Businesses allegedly transferred higher costs to their customers despite resilient demand. In August, business confidence was hindered by concerns about inflation and competition. The panelists’ level of optimism had dropped since April 2023.
