India’s manufacturing sector gained momentum in September, with the Manufacturing Purchasing Managers’ Index (PMI) rising to 55.1 from 52.8 in August, according to data from HSBC and S&P Global.
The latest reading marked the strongest improvement in manufacturing conditions in seven months. Since the index remained above the 50-point threshold, it continued to signal expansion in factory activity.
New Orders Rise at Fastest Pace in Seven Months
Demand improved significantly during September, helping new orders grow at their fastest rate in seven months.
Stronger demand was reported across several industries, including electronics, food, pharmaceuticals and textiles.
Export orders also accelerated. Manufacturers reported stronger demand from customers in Brazil, Europe, the United Arab Emirates and the United States.
Factory Output Growth Accelerates
Manufacturing production increased at its fastest pace in four months as stronger order volumes supported output.
Intermediate goods recorded the strongest performance across the sector. By comparison, capital goods saw the weakest rate of growth during the month.
The stronger production figures suggest that India’s manufacturing sector entered the final part of the quarter with improved momentum.
Manufacturing Employment Recovers
Hiring conditions also strengthened in September.
Employment increased at a solid pace after declining in August, while the rate of job creation reached its highest level since May.
The improvement in hiring reflected stronger production needs and rising demand across the manufacturing industry.
Manufacturers Increase Inventories
Indian factories also increased purchases of raw materials and other inputs during September.
Stocks of purchased materials expanded at their fastest rate in seven months. Meanwhile, inventories of finished goods recorded their second-largest increase in almost 12 years.
The inventory build-up suggests that manufacturers were preparing for continued demand in the months ahead.
Input Costs and Selling Prices Rise
Cost pressures increased during September as manufacturers faced higher prices for electronic components, pharmaceutical products and steel.
Companies also raised selling prices at a faster rate than in August.
However, both input cost inflation and selling price inflation remained below their historical averages, suggesting that overall price pressures were still relatively contained.
Business Confidence Improves
Manufacturers became more optimistic about future conditions, with business confidence reaching a four-month high.
Companies pointed to stronger enquiries and expectations of favorable demand conditions as key reasons for the improved outlook.
Pranjul Bhandari, Chief India Economist at HSBC, said the manufacturing sector ended the quarter on a stronger footing, supported by improved domestic and international demand.
Despite September’s stronger performance, the average Manufacturing PMI for the second fiscal quarter stood at 53.8, its lowest level for the same period since 2021.
Overall, India’s manufacturing sector showed clear signs of improvement in September, supported by stronger orders, higher production and renewed hiring activity.
