India Manufacturing Growth Hits Five-Year Low

Pranjul Bhandari, Chief India Economist at HSBC, noted that while production continues to expand, the pace has become markedly sluggish. This cooling trend extends to international markets, where demand from key regions—including Germany, the United States, and mainland China—lost momentum compared to July. The softening demand forced a shift in labor strategy, resulting in the first contraction in manufacturing employment in two-and-a-half years.

Despite the broader slowdown, the data reveals a complex internal landscape. Consumer goods remain a lone bright spot, providing some resilience against challenging market conditions. Firms are also navigating shifting cost structures; while expenses for items like steel and transportation persist, overall input cost inflation hit a six-month low. Consequently, manufacturers are keeping price hikes modest—the slowest in 45 months—to preserve competitiveness. Although 16 percent of surveyed companies remain optimistic about production growth over the next year, the majority expect output to hold steady, reflecting a cautious outlook for the coming months.