Mint Quick Edit | Slightly slower manufacturing isn’t a worry
Subscribe to enjoy similar stories. September saw manufacturing activity in India slow, with the HSBC purchasing managers’ index (PMI) for the sector, as compiled by S&P Global, declining to 56.5 from 57.5 in August.
This was the weakest reading in eight months, but still comfortably above the 50 level that separates expansion from contraction. The broad takeaway: while expansion has slowed, it remains robust.
That said, headwinds have emerged in the external sector as demand for Indian exports weakens amid troubles in a global economy weighed down by geopolitical tension. This puts pressure on the broader Indian economy, whose output growth slowed to 6.7% in the three months ended June.
While this sub-7% reading was on the back of last year’s high base, the Reserve Bank of India’s 7.2% growth forecast for 2024-25 may be slipping out of sight. The Economic Survey’s range of 6.5-7% looks likelier, especially if there’s no relief from global conditions.
Thankfully, with inflation in August clocking under RBI’s target of 4% for the second month in a row, the space for a monetary policy pivot to support growth is likely to expand. Yet, RBI may stay in wait-and-watch mode until it’s sure of price stability.
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