Nikkei India Manufacturing Purchasing Manager’s Index (PMI) fell to 50.3 in October from 51.2 in September as output rose only fractionally while new business orders stagnated.
A reading above 50 on the index denotes expansion and less than that indicates contraction in activities.
“This indicated a broad stagnation in the health of the manufacturing sector during October. At the sector level, improvements in consumer goods negated deteriorations in investment and intermediate goods,” Nikkei said in a release on Wednesday.
Panellists in the monthly survey attributed some of the subdued demand conditions to negative impacts of the goods and services tax (GST).
Meanwhile, new export orders for Indian goods reduced in October and the rate of contraction was the fastest since September 2013.
However, employment increased for the third consecutive month.
“Manufacturing production rose at the weakest pace in the current sequence of growth,” noted Aashna Dodhia, Economist at IHS Markit and author of the report.
Business confidence also eased to the weakest since February as some firms expressed concerns over negative GST effects.