"Although the health of the manufacturing sector continued to improve, the pace of expansion was the slowest in the year-to-date," a release from the HSBC PMI Index states.

Output in the Indian manufacturing sector increased in August. However, there were some mentions that powercuts continued to hamper production. With exports slightly down, production subsequently expanded at the slowest pace in nine months. New export orders fell for the second successive month, amid reports of weaker international demand and unfavourable exchange rate conditions. However, the rate of contraction was only slight. Meanwhile, the current period of expansion in order book volumes was extended to a 41-month sequence. That said, the latest data signalled the slowest rate of growth since last November.

Post-production inventories at manufacturers in India were accumulated at a slight pace.

Commenting on the India Manufacturing PMII survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said,
"The momentum in the manufacturing sector eased further on the back of weak external demand and output disruptions caused by the major power failures in early August. The power failures also partly contributed to a rise in backlogs of work as manufacturing companies struggled to finish orders on time. However, employment remains a bright spot, expanding at the fastest pace since data collection started 7 years ago. The inflation picture, on the other hand, was a bit mixed. While input price rose at a slightly slower pace, output price inflation picked up due to higher import costs and taxes. With the slowdown partly supply driven and inflation risks still lingering, these numbers underscore that the room for policy rate cuts is very limited at the moment."

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