India’s manufacturing sector activity fell to a nine-month low (56.6) in November. The decline was mainly due to weak growth in sales and production, reflecting growing market challenges. According to PTI news, this information was given in the monthly report of HSBC India Manufacturing Purchasing Managers Index (PMI) released on Monday. Let us tell you, according to PMI, a score above 50 indicates expansion and a score below 50 indicates contraction.
Impact of tariffs and global sales
According to the news, HSBC’s Chief Indian Economist Pranjal Bhandari has cited US tariffs as the main reason for this slow expansion. Growth in new export orders averaged the slowest in a year, according to the report, and the index fell to a 13-month low. Although the companies suggested positive international sales trends (higher sales in Africa, Asia, Europe and the Middle East), overall growth momentum slowed marginally. “Expectations (confidence of businesses) for future production fell significantly in November, potentially reflecting growing concerns over the impact of tariffs,” Bhandari said.
Hope for US trade agreement and tariff solution
Amid manufacturing sector concerns, Commerce Secretary Rajesh Agarwal had on November 28 said India hopes to strike a trade deal with the US this year itself, which will resolve the tariff issue for Indian exporters. The bilateral trade agreement between the two countries has come to a halt due to the Trump administration imposing tariffs on Indian exports. Aggarwal clarified that a bilateral trade agreement may take time, but India is engaged in a trade agreement with the US on an interim framework, which will resolve the reciprocal tariff challenge.
On price rise and employment front
Inflation rate decreased in November. Input costs (cost of raw materials) rose at the slowest pace in nine months and selling charges rose at the slowest pace in eight months. The manufacturing sector adjusted its hiring activities in view of the slowdown in new orders growth. Employment growth was the slowest in this 21-month period of continuous growth.
Weak confidence of companies
Companies’ confidence that output will grow over the next 12 months remained positive, but sentiment fell to its lowest level in more than three years. According to the report, the subdued forecasts were due to the competitive landscape, including increasing competition from international companies.
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