India’s manufacturing activity in September expanded for the fifteenth month in a row, but slowed down the acceleration from the previous month. The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) posted at 55.1 for September, down marginally from August’s 56.2. Amid global headwinds, policy shocks, and recession fears, the manufacturing sector remains in good health. The expansion in the industry is attributed to new business growth, expanded operating capacities, and demand resilience. Leading indicators suggest that “output looks set to expand further at least in the short-term as firms seek to fulfil sales contracts and replenish stocks”, Pollyanna De Lima, Economics Associate Director, S&P Global Market Intelligence, said in the PMI note.
An increased demand from both domestic and international clients resulted in a buoyant output, increased international sales, and a substantial uptick in new orders. All of this, in confluence, aided the current sequence of expansion to stretch across a 15 month period now. Input costs rose the slowest since October 2020, which gave a boost to producers’ sentiments. Eased up price pressures and a weakened inflationary environment also gave respite to the manufacturers. “Businesses also benefited from a notable moderation in price pressures. Input costs rose at the slowest rate in almost two years as suppliers’ stocks improved in line with subdued global demand for raw materials and recession risks,” Lima noted. Indian companies, she added, sought to restrict selling price hikes amid the overall charge inflation easing to a seven-month low.
S&P Global, in its report, also mentioned about the business sentiment improving for the third month in a row in September. Businesses were more confident in terms of the outlook amid the inflation worries subsiding. Positive forecasts pertaining to outlook for production were backed by an expanded client base, greater customer enquiries, and marketing efforts by businesses. Commenting on the business sentiment, Lima stated, “Once again we saw businesses become more confident in the outlook as inflation worries were tamed. The overall level of positive sentiment seen in September was the best in over seven-and-a-half years”. The inventory accumulation showed acceleration from August. A slight deterioration, however, was seen in the vendor performance, after showing improvement in the previous three months.