Slowdown Seen as Manufacturing Growth Slips to 3-Month Low
India's factory activity expanded at a slower pace in August as demand softened, indicating a minor cooldown in the country's robust economic recovery. The latest manufacturing purchasing managers' index (PMI) from S&P Global showed factory output growth moderated to a 3-month low of 57.5 last month, slipping from July's 58.1 amid slightly weaker orders and output.
While still firmly in expansion, the index was lower than initial estimates and dragged overall production lower from recent highs. The demand gauges of new orders and output both eased to 7-month lows as competitive pressures weighed slightly. International sales also saw softer growth. However, resilient demand continued to support output price inflation which remained strong despite easing input cost pressures.
Factory hiring was also upturned though slowing for a second straight month on the back of the small slackening in activity. Business optimism remained positive despite slowing on inflation and competition concerns looking ahead. The growth pullback was minor and came off a high base, with the economy still performing admirably. Ongoing price pressures could keep policymakers vigilant about balancing inflation with growth. But with inflation projected to continue easing, further stimulus is expected to support manufacturing's ongoing expansion.
