MUMBAI: The economy is losing the steam it regained in October after the poor show in the previous two months, as the manufacturing sector saw a slump in November with the Purchasing Managers Index (PMI) plunging to an 11-month low of 56.5.
In the previous month, the index had stood at 57.5, yet the reading does not indicate contraction as it’s still strong above 50.
The news comes days after the government said the economic growth slumped to a seven-quarter low of 5.4 per cent in the September quarter, leading to a rash of growth downgrades ranging from a low of 6 per cent to 6.8 per cent for the full fiscal.
According to the HSBC final manufacturing PMI, compiled by S&P Global, the index dropped from 57.5 in October to 56.5 which still matches the figures of January and September.
"The manufacturing PMI stood at 56.5 in November, down slightly from the prior month, but still firmly within the expansionary territory," said Pranjul Bhandari, the chief economist at HSBC India, on Monday.
"Strong broad-based international demand, evidenced by a four-month high in new export orders, fuelled the continued growth of the sector. At the same time, the rate of output expansion is decelerating due to intensifying price pressures," she added.
According to her, the index has signaled an improvement in the overall health of the sector during the period as the pace of growth remains above its long-run average.
During the month, producers saw a weaker yet robust upturn in new business intakes. It also recorded the second-weakest rate of expansions in the past 11 months.
When it comes to employment, the survey notes that factory employment increased for the ninth month in a row but, the rate of job creation softened compared to October yet remained solid and staff were hired on both permanent and temporary bases.
"Although price pressures curbed domestic sales to a certain extent, new export orders gained momentum, which was the best seen in the past four months," the survey said.