The HSBC final India Manufacturing Purchasing Managers’ Index (PMI) dropped to 56.5 in November from 57.5 in October, with a preliminary estimate at 57.3. Despite the decline, the PMI stayed above the 50 mark, indicating continued growth for almost three and a half years. The sub-indexes for output and new orders fell to their lowest and second-lowest levels this year, signaling slower expansion due to inflation and heightened competition. However, strong demand kept the growth trajectory positive.
Inflationary pressures intensified, with both input and output prices rising. Cost price inflation increased at its fastest pace since July, while output prices saw their largest surge in over 11 years, reflecting persistent inflationary challenges in the sector.
India’s Q2 GDP Slows to 7-Quarter Low
India’s GDP growth for the second quarter of the year dropped to 5.4%, marking the lowest rate in the past seven quarters. This slowdown has led several major financial institutions to revise their growth forecasts, with Goldman Sachs downgrading its estimate to 6%, Barclays to 6.3%, and Emkay to 6%. The decline can be attributed to several factors, including weak performance in the manufacturing sector, persistent inflationary pressures, and stagnating wage growth. Although there have been calls for a rate cut to stimulate the economy, the Reserve Bank of India (RBI) remains hesitant to make such a move, citing the ongoing risks posed by inflation.