India manufacturing activity rises to seven-month high of 55.1 in September

New business data points to the fact that India's manufacturing activity rebounded sharply in September, rising to a seven-month high as stronger domestic and overseas demand lifted new orders and production.

The HSBC India Manufacturing Purchasing Managers' Index (PMI) advanced to 55.1 in September from 52.8 in August, according to data released by HSBC on October 1.

A reading above 50 indicates expansion, while one below 50 signals contraction.

Manufacturing PMI had eased from 54.2 in June to 53.5 in July and further to a five-year low of 52.8 in August before recovering in September.

Despite the improvement at the end of the quarter, manufacturing momentum during the July-September period remained relatively subdued. The PMI averaged 53.8 in the second quarter of FY27, its lowest quarterly average since the corresponding period of 2021, the release noted.

The September recovery was led by firmer demand for electronic goods, food products, pharmaceuticals and textiles.

The improvement in demand translated into the sharpest gain in factory production in four months.

Among broad manufacturing categories, intermediate goods recorded the strongest expansion in both output and new orders, while capital goods remained the weakest segment, with expansion slowing from August.

Manufacturing employment returned to expansion in September after declining in the previous month. The pace of job creation was the strongest since May.

Manufacturers additionally became more optimistic around the outlook. Business confidence strengthened to a four-month high, supported by new enquiries and expectations of favourable demand conditions over the upcoming months.

Price pressures climb, stay mild

Input cost inflation accelerated in September, reflecting elevated prices for electronic components, pharmaceutical products and steel. That stated, the rate of gain remained below its historical average.

Manufacturers additionally boosted selling prices at a quicker pace, although output price inflation remained modest and below its long-run trend.

“India’s factory sector ended the quarter on a firmer footing,” stated Pranjul Bhandari, chief India economist at HSBC, pointing to stronger domestic and overseas demand, the resumption in hiring and increased stock-building by manufacturers.