India’s Manufacturing Growth Hits 7-Month High In September On Strong Domestic, Export Demand

India’s manufacturing sector staged a strong recovery in September, with factory activity expanding at its fastest pace in seven months as robust domestic and overseas demand lifted new orders, production and hiring.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 55.1 in September, up sharply from 52.8 in August, signalling a renewed acceleration in operating conditions across the sector.

A PMI reading above 50 indicates expansion, while a reading below 50 points to contraction.

The latest data showed that stronger demand translated into higher sales and output, with total sales growth reaching its highest level since February. Demand was particularly strong across electronics, food, pharmaceuticals and textiles.

Export orders also gathered pace, with manufacturers reporting stronger business from customers in Brazil, Europe, the UAE and the US.

“India’s factory sector ended the quarter on a firmer footing,” HSBC Chief India Economist Pranjul Bhandari said, noting that stronger domestic and overseas demand supported sales and production.

The improvement was also visible in the labour market. After a brief slowdown in August, manufacturing employment resumed growth in September, with the pace of job creation described as solid and the strongest since May.

Firms also stepped up purchases of raw materials and increased inventories in anticipation of stronger demand in the months ahead. Finished goods inventories rose for the third consecutive month, reaching their second-fastest pace of increase in nearly 11-and-a-half years.

The buildup suggests manufacturers are preparing for sustained sales rather than operating with lean stock levels.

Business confidence also improved, with manufacturers’ expectations for future output reaching a four-month high. A healthy pipeline of new orders and inquiries contributed to the more positive outlook.

On the price front, both input costs and selling prices increased at a faster pace in September, although the rates of inflation remained relatively mild by historical standards.

The HSBC India Manufacturing PMI is compiled by S&P Global from responses from purchasing managers at around 400 manufacturing companies, making it a closely watched indicator of business activity and demand trends in the economy.