Manufacturing activity rises to 7-month high in Sept, PMI shows

The HSBC India manufacturing PMI rose to 55.1 in September from 52.8 in August, ending a three-month decline. However, the average for the July-September quarter was 53.8, the lowest since the same period in 2021.

A PMI reading of more than 50 denotes expansion in activity from the previous month, while a print below 50 indicates contraction.

“September data showed a recovery in growth momentum across India’s manufacturing industry, with faster increases in new orders and output supporting job creation and inventory accumulation,” S&P Global said.

“Moreover, business confidence strengthened to a four-month high. On the price front, there were quicker increases in both input costs and selling prices, but rates of inflation remained mild by historical standards.”

Manufacturing firms reported paying higher for electronic components, pharmaceutical items and steel in September. The rate of inflation accelerated from August, but remained below its long-run average, S&P Global said. Selling prices also increased at a quicker pace in September but remained modest.

New business rose in September thanks to improved demand for electronic, food, pharmaceutical and textile products, S&P Global said. Total sales at manufacturing firms grew at the fastest pace since February.

Manufacturing firms reported a quicker rise in new export orders, with demand particularly improving from clients in Brazil, Europe, the United Arab Emirates, and the US.

Improved demand last month spurred the sharpest expansion in factory production in four months, S&P Global said. “Intermediate goods was the brightest area of India’s manufacturing industry during September, topping the growth rankings for both new orders and output. Capital goods was the weakest link, recording only modest increases that were weaker than in August,” S&P Global said.

Jobs growth resumed in September, following a blip in August, with the pace of rise in employment the highest since May.

Manufacturing firms procured more materials for use in production processes and to add to inventories, S&P Global said. “Stocks of purchases continued to expand at the end of the second fiscal quarter. Having quickened from August, the pace of accumulation was sharp, the strongest in seven months and well above its long-run average,” S&P Global said.

Indian manufacturers were more optimistic about the future, with the overall level of positive sentiment rising to a four-month high in September. Improved optimism was underpinned by new enquiries in the pipeline and expectations that demand conditions will remain favourable.

In line with expected increases in future sales, companies sought to raise their stock levels, S&P Global said. Holdings of finished products increased for the third month in a row and at the second-fastest pace in 11-and-a-half years, behind only July.