PMI: India’s Manufacturing Activity Heads Towards Stagnation In October

India’s manufacturing sector is heading towards stagnation with activity improving only slightly in October.

The Nikkei India Manufacturing Purchasing Managers’ Index fell to 50.6 last month from 51.4 in September, according to a statement. This was the twenty-seventh straight month when India’s manufacturing PMI remained above the 50-point mark.

In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

The cooling of the manufacturing sector continued with both factory orders and production rising at the weakest rate in two years. Job creation also softened to a six-month low and companies remained reluctant to hold stock with business confidence slipping to its lowest in two years.

“Weakening demand had a domino effect in the manufacturing industry, knocking down rates of increase in production, employment and business sentiment. With quantities of purchases contracting for the third month in a row, input costs fell for the first time in over four years during October,” Pollyanna de Lima, principal economist (economic indices) at IHS Markit, said.

However, five successive repo rate cuts by the Reserve Bank of India could potentially drive private consumption and help induce higher growth, even if it comes with a lag, she said.

India’s economic growth slumped for the fifth straight quarter to an over six-year low of 5 percent in the three months ended June, as consumer demand and private investment slowed amid deteriorating global environment.