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However, the index remained above its long-term average of 54.0, indicating a significant improvement in operating conditions and ongoing expansion.
“The Indian manufacturing sector continued to expand in August, although the pace of expansion moderated slightly.New orders and output also mirrored the headline trend, with some panellists citing fierce competition as a reason for slowdown,” said Pranjul Bhandari, chief India economist at HSBC.
Additionally , the survey revealed that new business witnessed a steep rise throughout the second quarter of the fiscal year, but the rate of expansion slowed to a seven-month low. Similarly, new export orders grew at the slowest pace since the beginning of the 2024 calendar year. Manufacturers benefited from a reduction in cost pressures during August.
“On a positive note, the rise in input costs slowed sharply. Manufacturers increased their raw material buying activity in order to build safety stocks. In line with input costs, the pace of output price inflation also decelerated, but the deceleration was to a much smaller extent, thereby increasing margins for manufacturers,” Bhandari added.
The survey also stated that job creation moderated midway through the second fiscal quarter, with some firms reducing their headcounts. However, the overall rate of employment growth remained solid in the context of historical data.
“Business outlook for the year ahead moderated slightly in August, driven by competitive pressures and inflation concerns,” said Bhandari
Meanwhile, India’s economic growth slowed to a 15-month low of 6.7 per cent in April-June 2024-25 compared to 8.2% in the corresponding period of the previous year, primarily due to the underperformance of the agriculture and services sectors, as per the government data released on Friday.
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