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Falling orders in India

Output from Indian factories fell in October

Conditions in India’s manufacturing industry deteriorated for the third consecutive month in October, according to the HSBC Purchasing Managers’ Index™. The index was 49.6, unchanged from September.

Manufacturers cut production as new orders continued to fall, indicating weaker demand. Backlogs of work rose amid evidence of power cuts.

Order flows remain weak, despite a bounce-back in export orders after two months of decline

Leif Eskesen,
Chief Economist for India and ASEAN, HSBC

Leif Eskesen, Chief Economist for India and ASEAN, HSBC, said: “Manufacturing activity contracted for the third consecutive month in October. Order flows remain weak, despite a bounce-back in export orders after two months of decline. Moreover, businesses continue to cut back purchases and a rise in inventories suggest that output will remain subdued.”

While domestic demand weakened, foreign orders grew for the first time since July. Anecdotal evidence suggested that the weaker rupee had boosted foreign demand.

However, manufacturers also said that the weaker rupee had led to higher prices for imported raw materials, with input cost inflation hitting a 16-month high. These cost burdens were partly passed on to consumers. Employment in the sector rose after a slight decline in September.

The PMI™ is based on a survey of purchasing executives in Indian companies. An index figure above 50 signals expansion, while below 50 signals contraction.

The intellectual property rights to the HSBC India Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under license. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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