The short
- Headline: PMI at 57.7 (Aug: 59.3) — expansion continues but at a slower clip.
- Prices: Input costs and factory-gate prices accelerated, signaling pass-through pressure ahead.
- Jobs: Hiring intentions cooled; only a modest share of firms added staff.
- Demand mix: Exports improved even as domestic new orders moderated.
Detail read
| Component | Direction | Read-through |
|---|---|---|
| Output | Softer | Factories still expanding but normalizing from August highs. |
| New orders | Softer | Competitive pressure domestically; export orders firmer. |
| Input costs | Higher | Commodity and logistics pass-through risks building. |
| Output prices | Higher | Faster rise raises margin and CPI watch. |
| Employment | Softer | Hiring at a low share of firms relative to recent months. |
Sectors most exposed
- Autos & durables: Sensitive to price pass-through; watch retail discounting and dealer inventory.
- Capital goods: Backlogs healthy; monitor input spreads and execution cadence.
- FMCG: Volume elasticity tested if shelf prices rise again.
Policy angle
- A policy pause keeps optionality for year-end; the price surge argues for caution on rapid easing.
- Next data checkpoints: fuel resets, October CPI print, and global growth signals.
Operator checklist
- Review vendor contracts for variable fuel/freight clauses; plan phased pass-through bands.
- Model a 50–100 bps gross-margin headwind where pass-through lags 4–6 weeks.
- Hedge input spikes via staggered procurement; avoid oversized spot buys in thin markets.
FAQ
- Is 57.7 weak? No—still solid expansion. The signal is slower momentum with hotter prices.
- What flips the view? A second month of hot output prices alongside weaker orders would raise margin risk alerts.