India's Manufacturing Growth Softens For Second Consecutive Month As Demand Slows

India's manufacturing growth slowed for the second consecutive month due to a decrease in demand, combined with higher costs of raw materials, has negatively affected business confidence, according to a survey.

Factory activity in October dropped to an eight-month low of 55.5 from 57.5 in September, according to the S&P Global Manufacturing Purchasing Managers' Index. This is lower than the forecasted uptick of 57.7 from a Reuters poll.

However, the index has stayed above the 50-mark, indicating expansion rather than contraction, for the 28th month in a row.

According to Pollyanna De Lima, the Economics Associate Director at S&P Global Market Intelligence, India's manufacturing sector experienced significant growth in October, despite the difficult global economic conditions.

"Still, insights from surveyed purchasing managers pointed to the deceleration of several measures," De Lima added, Economic Times reported.

According to De Lima, the slowdown was primarily driven by consumer goods, which experienced weaker growth in sales, production, exports, input inventories, and buying levels.

Factory growth was negatively impacted by competitive pressures and weak demand at certain plants, according to the data.

Granular data highlighted a particularly marked slowdown in the consumer goods sub-sector. Although a further increase in new orders was a positive development, October data signalled a deceleration in growth since September, the statement said.

The expansion in international demand slowed to a four-month low.

In October, business confidence was affected by concerns regarding demand and inflation. The future output sub-index, which had reached a nine-month high in September, fell to its weakest level since May.

Last month, input prices increased, causing companies to raise their selling prices to offset the additional costs. However, the rate of price increases slowed down.