India's manufacturing sector expansion moderated in November, as a slowdown in new export orders, partly attributed to the impact of US tariffs, tempered growth. A key private survey released on Monday also revealed that job creation within the sector decelerated to its weakest pace in nearly two years.
PMI Remains in Expansion but Shows Notable Slowdown
The headline HSBC India Manufacturing Purchasing Managers' Index (PMI) registered 56.6 in November, down from 59.2 recorded in October. While the latest reading remains firmly above the critical 50-point mark that separates expansion from contraction, it highlights the most subdued improvement in the sector's operating conditions since February this year.
The index also dipped below its long-run average of 54.2. The survey is compiled from responses provided by purchasing managers at approximately 400 manufacturing firms across India.
Export Orders and Employment Weaken
Despite manufacturers reporting a substantial increase in overall order book volumes, the growth was primarily driven by domestic demand. The survey pointed to a noticeable easing in new export orders, with firms citing the influence of US tariffs as a contributing factor to the softer international demand.
A more concerning signal from the November data was the trend in employment. The rate of job creation across the manufacturing sector slowed to a 21-month low, indicating that businesses are becoming more cautious about hiring amid the changing demand dynamics.
Implications and Sector Outlook
The November PMI data presents a nuanced picture of India's industrial economy. On one hand, the sector continues to grow, supported by robust domestic orders. On the other, the external environment is showing signs of pressure, and this is beginning to reflect in hiring decisions.
Analysts will be watching closely to see if this moderation is a temporary blip or the start of a broader softening trend, especially in the face of persistent global economic headwinds and trade policy shifts.
