The Purchasing Managers’ Index (PMI) for manufacturing remained robust in September. Global headline inflation may have remained elevated for a longer period than estimated, but the domestic economic activity exhibits resilience on the back of strong domestic demand, Das added.
In the central bank’s industrial outlook survey of July-September 2023, manufacturing firms are optimistic about demand conditions in Q3 of 2023-24. While the optimism of services sector companies waned in Q3 vis-à-vis the previous period, infrastructure sector companies remain upbeat in terms of the overall business situation.
The RBI governor also said that “capacity utilisation in the manufacturing sector, on a seasonally adjusted basis, continued to trend up, which augurs well for investment activity.”
Manufacturing firms expect an uptick in input prices in Q3, with selling price growth to be marginally lower over the previous quarter, the RBI MPC statement said.
“As per manufacturing firms polled for the Purchasing Managers’ Index (PMI), the pace of increase in input prices, which quickened for the third successive month in August 2023, significantly retreated in September due to reduction in aluminium and oil prices. Higher raw materials, labour costs and increased demand led to an increase in output prices in July-September albeit at a slower pace than in May-June 2023,” said the report.Meanwhile, the RBI’s Monetary Policy Committee (MPC) kept the policy repo rate unchanged at 6.50% and decided on withdrawal of accommodation stance to control inflation as it announced the decision of its fourth bi-monthly monetary policy meeting on Friday. The three-day meeting of the Das-led MPC began on October 4. The MPC maintained a status quo on the policy repo rate in all three meetings held in the current financial year so far.
