India's manufacturing sector experienced significant growth in September, marking the end of a three-month decline as strong demand fuelled the fastest increase in factory activity in seven months, boosted hiring, and improved business confidence, according to a private survey released on Thursday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, increased to 55.1 in September from a five-year low of 52.8 in August, although it was below the preliminary estimate of 55.7. This represented the highest reading since February.
A PMI reading above 50.0 indicates growth in activity.
According to the survey, new orders grew at their quickest rate since February, fueled by heightened demand for electronic, food, pharmaceutical, and textile products.
Export orders also picked up speed, with manufacturers attributing the rise to stronger demand from customers in Brazil, Europe, the UAE, and the US.
Production increased significantly, with the growth rate reaching its highest level since May, driven by fresh business orders and strong demand.
Businesses increased their purchases of materials and expanded inventories in anticipation of expected sales.
According to Pranjul Bhandari, chief India economist at HSBC, finished-goods inventories saw their second-largest growth in almost 12 years, indicating a notable move away from leaner stock levels.
The growing demand prompted a revival in recruitment, with employment increasing at its fastest pace since May, rebounding from a notable decrease in August—the first decline in factory jobs in two and a half years.
Business confidence reached its highest level in four months during September, driven by fresh inquiries and anticipation of continued demand.
