Manufacturing Sector Likely To Grow At Slower Pace By 2.8%: Report

For services, a revival in pent-up demand is expected to boost the hospitality sector, resulting in much higher growth in trade, hotel transport and communication sector

The Bank of Baroda in a report on Thursday said that the manufacturing sector will grow at a much slower pace by 2.8 per cent against the 4.8 per cent in quarter one of the financial year (FY) 2023. 

The manufacturing sector is expected to be hit with indicators such as net sales and profit of industries such as textile, iron, plastic and other metallic product registering negative growth in the Q2FY23, the report said.

For services, on the other hand, a revival in pent-up demand is expected to boost the hospitality sector, resulting in much higher growth in trade, hotel transport and communication sector. 

Earnings reports for the following sectors namely telecom, education, retail and trading are mirroring a similar sentiment. 

Talking about the outlook for FY23, the report mentioned that the high-frequency indicator for Q2FY23 has been impacted by the back-of-base effect and hence needs to be read with caution when compared with previous quarters.

Indicators such as tractor and two-wheeler sales have registered some moderation in Q2FY23, however, on the back of the festive demand, a pickup is likely in the coming quarters which will lift growth. 

For October 2022, passenger sales have already begun to show early signs of recovery. 

For industrial sector, while the sale of some durable and non –durable goods has been hit due to inflation in the past. 

The recent trend of cool-off in prices is likely to reverse the dip seen previously in the sector. Some of the earnings report have also been signalling the same (FMCG sector), the report stated.