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New Delhi: The Indian manufacturing sector’s growth decelerated to a three-month nadir in August, with firms experiencing a milder increase in new orders and production.
The headline Purchasing Managers’ Index (PMI) released by HSBC on Monday registered at 57.5, a slight decrease from July’s 58.1. A reading above 50 indicates expansion, while below 50 points to contraction.
Nonetheless, easing cost pressures buoyed purchasing activities as the rate of input price inflation declined to its lowest in five months.
Although it diminished, the index still surpassed its average and remained above the pivotal 50 threshold, marking growth from contraction, a position it has maintained since July 2021.
Support came from persistent, albeit slightly weakened, demand. The output and new orders sub-indexes, which measure demand, both fell to seven-month lows. International demand expanded at its feeblest rate since January yet remained robust.
India’s inflation dropped to a near five-year trough of 3.54% in July, primarily due to a high-base effect, suggesting the deceleration is transitory. The Reserve Bank of India (RBI) is anticipated to reduce interest rates by 25 basis points in the next quarter.
A positive demand outlook and business confidence prompted firms to increase their workforce for the sixth consecutive month, though the pace of hiring decelerated for the second month in a row. The forecast for the coming year was strong, despite reaching a 16-month low, with optimism tempered by worries over inflation and competition.
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