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Home arrow Business News arrow Rise in new order volumes received by Indian manufacturers in October: PMI
Rise in new order volumes received by Indian manufacturers in October: PMI Print E-mail
Written by Hari   
Wednesday, 03 November 2010
Mumbai: There has been a substantial rise in new order volumes received by manufacturers in India in October. This was the nineteenth successive month where an increase in incoming new business was indicated.

Whilst the rate of new order growth accelerated from September’s ten-month low, it remained softer than the notably steep expansions recorded at the start of 2010. New export orders rose during the month, but at the slowest pace since November 2009. The seasonally adjusted HSBC Purchasing Managers’ Index (PMI) – a headline index designed to measure the overall health of the manufacturing sector – posted 57.2 in October, rising from September’s reading of 55.1. Moreover, the strengthening of business conditions regained the momentum lost in September.

"After some bouncy data in the last few months, India's economy has picked up steam again. The manufacturing sector remains supported by strong local consumption growth, and growing employment suggests that domestic demand will remain robust. Price pressures, however, are still too strong for comfort, possibly prompting the central bank to hike again before the end of the year," said Frederic Neumann, Co-Head of Asian Economics Research at HSBC.

October data signalled a marked rise in input prices faced by manufacturers in India. Moreover, the rate of input cost inflation was stronger than that recorded in September. The increase in input costs drove a further rise in output prices. However, this was relatively small compared to that seen for input prices, suggesting that manufacturers were still finding it difficult to pass on increased costs to customers.

Output expanded sharply in October, reflective of the sustained increase in new orders. Despite this, backlogs of work accumulated further, indicating that pressure on operating capacity continued. Finished goods stocks rose fractionally during the month.

Indian manufacturers reported a marginal increase in employment during October, attributing this to sustained growth in output and new orders. However, despite the marked improvement in business conditions indicated over the year so far, October’s job creation was only the first increase in staffing levels in five months.

Purchasing activity increased markedly in October, due to higher production requirements. Subsequently, suppliers’ delivery times lengthened, albeit only marginally.
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