Mfg sector activity hits 9-mth low

India’s manufacturing momentum weakened noticeably in November, slipping to a nine-month low amid the drag of steep US tariffs and a consequent slowdown in export demand.

The latest HSBC Manufacturing PMI, compiled by S&P Global and released on Monday, showed that the imposition of 50% tariffs on several Indian goods has begun to bite, with new export orders rising at their weakest pace in more than a year.

Pranjul Bhandari, Chief India Economist at HSBC, noted that the final November readings “confirmed that US tariffs caused the manufacturing expansion to slow”, pointing out that the new export orders index fell to a 13-month low.

Inflationary pressures softened further. Input costs rose at their slowest rate in nine months and selling charges at their weakest in eight, offering some respite to manufacturers.

Yet the overall headline PMI fell sharply from October’s 59.2 to 56.6 in November—still comfortably above the neutral 50 mark and its long-run average of 54.2 but signalling the slowest improvement in operating conditions since February.

Business confidence also took a hit. Sentiment towards future output dropped to its lowest level since mid-2022, potentially reflecting concerns that tariff-related headwinds could outweigh the fading boost from recent GST reductions. Although manufacturers continued to report strong order books, supported by competitive pricing and firm demand in several markets, the overall growth rate moderated due to challenging market conditions, project delays and heightened competitive pressures, both domestic and international. Output growth followed the same pattern: robust but weakening. Some firms benefitted from efficiency gains and stronger domestic demand, while others cited subdued interest in specific product categories. International sales to Africa, Asia, Europe and the Middle East remained favourable, though overall export growth lost some momentum.

Hiring and purchasing activity grew only marginally, with employment rising at the softest pace in the current 21-month expansionary stretch.