Daijiworld Media Network - New Delhi

New Delhi, Oct 1: India’s manufacturing sector regained momentum in September, with activity rising to a seven-month high on stronger domestic and overseas demand, according to the HSBC India Manufacturing Purchasing Managers’ Index (PMI).

The seasonally adjusted PMI rose to 55.1 in September from 52.8 in August, marking the strongest improvement in manufacturing conditions since February. A PMI reading above 50 indicates expansion, while a reading below 50 signals contraction.

The improvement was supported by faster growth in new orders and output. Demand for electronics, food products, pharmaceuticals and textiles strengthened, while new export orders also increased at a faster pace, with manufacturers reporting higher demand from Brazil, Europe, the UAE and the US.

“India’s factory sector ended the quarter on a firmer footing. The PMI rose to 55.1 in September, up from 52.8, as stronger domestic and overseas demand lifted sales and production,” Pranjul Bhandari, Chief India Economist at HSBC, said.

Factory employment also resumed growth in September, with the pace of hiring described as the fastest since May. Business confidence rose to a four-month high, supported by a healthy pipeline of new enquiries and expectations of sustained demand.

Manufacturers also increased their purchases of materials and built up inventories in anticipation of stronger sales. Finished goods inventories rose for the third consecutive month and recorded their second-largest increase in nearly 12 years, according to the survey.

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

The HSBC India Manufacturing PMI is compiled by S&P Global based on responses from purchasing managers at a panel of around 400 manufacturers.