Manufacturing and Service sector performance- India’s Q3 performance

India’s growth is driven primarily by three important sectors- agriculture, manufacturing, and services. Considering the population distribution of our nation is focused on major cities and towns the manufacturing and service sector is aiding to provide major employment and income to most of the population. A deep dive into the numbers, and how well we fared in the last quarter (Q3) can show our prospects for the trends expected for the year ahead.

Manufacturing sector Q3 performance

The manufacturing sector is said to have shown a slight dip in its performance, as per the PMI data. The PMI for September is said to be standing at 57.5 points, lower than August at 60.9 points. The IIP (Index of Industrial Production) also showed a  0.1 percent decline in the growth of manufacturing. This is said to be impacted by the heavy rains received in the last couple of months, which is said to have affected the mining sector production. Despite all these facts, India still performs better than its Southeast Asian counterparts despite the global economic challenges.

This can be taken as a symptom of the strong inflationary pressure that we can see which the Reserve Bank of India (RBI) is trying to tackle. By keeping the rates unchanged for the tenth time in a row, it remains to see how much can be done to revive the sector. With rising input costs such as raw materials, electricity, and allied amenities, it is said to have witnessed a slow growth. The key positive takeaway from the manufacturing sectors' positive growth is mainly from the manufacturing of the basic metal manufacturing which contributes close to 18 percent growth, chemical, and chemical products by 3 percent, and basic metals by 3 percent.

Service sector Q3 performance

In the services sector, India still faces a problem in terms of slow growth. The services PMI for September has fallen to 57.7points which shows a significant deceleration in the growth in the sector. This is a significant decline compared to August estimates of 60.9 points. It does not show promising growth prospects or a strong growth projection for 2025. GDP growth projections are said to be hovering under the 7-7.5 percent mark, previously projected by the RBI governor. The numbers do not add up to strong growth for next year.

Prospects for the end of 2024

The expectation of a slowdown is likely a trend we might see going towards next year. Consumption from the urban section is not picking up as anticipated and the rural consumption growth would not be enough to drive the country to a higher growth trajectory. It remains to be seen what would happen post the festive season of Diwali and Christmas- if there is a revival of growth prospects to close the year. Considering the current trends, the nation ending on a high note seems unlikely. India can hope for some miracle in the last two months of Q4 of 2024 to end the year on a high note. For now, the picture of the economy is pretty bleak.