India’s September PMI rises to 56.5: Manufacturing drives private sector growth higher

Follow Us

India’s private sector activity picked up pace in September, led by a stronger performance in manufacturing. The HSBC Flash India Composite PMI Output Index rose to 56.5 in September, from 54.3 in August.

The latest reading pointed to the strongest expansion in private-sector activity since June and took the index above its long-run average.

Manufacturing growth strengthens

Manufacturing emerged as the key driver of the improvement. The Manufacturing PMI climbed to 55.7 in September, from 52.8 in August, marking the sector’s best improvement in seven months.

ALSO READIndia August PMI rises to 54.6 – services activity recovers ,manufacturing growth hits 5-year low

Manufacturing output also increased at a faster pace. The Manufacturing PMI Output Index rose to 58.2, compared with 54.8 in August.

The Services Business Activity Index also improved, rising to 55.8 in September from 54.1 in August.

New orders rise at faster pace

New business increased at a faster rate across both manufacturing and services during September. Goods producers recorded the sharper acceleration, with sales growth reaching a seven-month high.

Services companies reported stronger demand for property, transport services and new travel bookings. Survey respondents also pointed to growing client interest in software and digital solutions.

ALSO READIndia’s services sector growth slows to 53-month low in July, exports resilient

Manufacturers reported stronger demand for aluminium products, electronic items, food, pharmaceutical goods and new models.

Employment growth remains strong

Companies continued to increase their workforce as output and new orders expanded. Employment rose solidly in September, with both manufacturers and services companies adding staff.

The rate of job creation was broadly similar across the two sectors.

Outstanding business also increased marginally at the composite level after declining in the previous two months. However, companies reported only mild pressure on operating capacity.

Export growth slows

New export orders continued to increase in September, but the pace of growth weakened from August.

The expansion in new export orders was the weakest in nearly three years, mainly due to slower growth among services companies. Manufacturers, however, recorded a marginally stronger increase in new work from overseas.

Survey respondents reported gains from markets including Brazil, Europe, the UAE and the US.

Input cost pressures ease

Input-cost inflation across the private sector eased to its lowest level since January in September. Softer cost pressures among services companies more than offset an increase in input costs faced by manufacturers.

Companies that reported higher costs cited increased spending on electrical components, food, fuel, metals, pharmaceutical ingredients and technology resources.

Selling-price inflation was broadly unchanged at the composite level. However, manufacturers raised factory-gate prices at a faster pace, while services companies recorded a weaker increase in prices charged.

Firms build inventory buffers

Manufacturers increased their purchasing activity at a faster pace during September. Input lead times also shortened, allowing companies to build up stocks.

Input inventories increased to their highest level since February, while growth in finished-goods inventories reached an 11-and-a-half-year high.

“Activity in the private sector gained momentum, led by stronger manufacturing. Output and new domestic orders rose at faster rates. Renewed tensions in the Middle East have once again led firms to build buffers to manage the uncertainties,” Pranjul Bhandari, Chief India Economist at HSBC, said.

Bhandari also said input purchases picked up pace and highlighted the sharp increase in finished-goods inventories.

Business confidence improves

Business confidence about the year-ahead outlook for output improved in September. Sentiment strengthened among both manufacturers and services companies, taking overall business optimism to a four-month high.

However, manufacturers faced renewed price pressures. “Price pressures firmed at manufacturers, with output price inflation gathering pace, signalling a renewed push to protect margins,” Bhandari said.

Overall, the September flash PMI showed stronger private-sector activity, with manufacturing providing the biggest boost. Faster output and new-order growth, solid job creation and improving business confidence supported the expansion, while slower export growth and renewed manufacturing price pressures remained key areas to watch.

TOPICSManufacturingPMIThis article was first uploaded on September twenty-three, twenty twenty-six, at twelve minutes past twelve in the night. © IE Online Media Services (P) Ltd