India's manufacturing sector expands as PMI hits 55.1 in September

The HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to 55.1 in September, up from 52.8 in August. This marks the highest reading since February, signaling a recovery after a three-month slowdown.

New orders recorded their fastest growth since February, fueled by heightened demand for textile, electronic, food, and pharmaceutical products. Export orders also increased, with manufacturers reporting stronger interest from clients in the US, Europe, the UAE, and Brazil.

Output expansion reached its strongest rate since May, supported by new business orders. To meet anticipated sales, firms increased material procurement, resulting in the second-largest rise in finished-goods inventories in nearly 12 years. Employment also saw a resurgence, growing at the fastest pace since May after experiencing a decline in August.

Cost pressures intensified, with input inflation for steel, pharmaceutical items, and electronic components rising faster than in August. Selling prices also increased, though the pace remained below the long-run trend. Business confidence hit a four-month high, driven by optimism regarding new enquiries and sustained demand.

What to watch: The Reserve Bank of India’s potential interest rate adjustments to address inflation currently exceeding the 4 per cent target.

Editor's note: The draft omits key context provided in the source text, specifically the mention of the preliminary estimate and the specific economic context regarding the RBI's interest rate projections.

This article is AI-generated and fact-gated. Original reporting: Business Standard