India Manufacturing PMI Climbs to Seven-Month High in September as Demand Picks Up

India’s manufacturing sector regained momentum in September, with stronger demand helping lift factory activity to its highest level in seven months. 

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The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 55.1 in September from 52.8 in August, signalling a pickup in manufacturing activity after the previous month’s slowdown. 

The September reading was the highest since February, when the PMI stood at 56.9. It was, however, slightly below the preliminary estimate of 55.7 released last month. 

Manufacturing Activity Expands for 59th Straight Month 

September marked the 59th straight month where the manufacturing PMI was above 50, indicating expansion in the sector. 

While September was marked by improved PMI levels, the Q2 FY27 PMI figure came in at 53.8, marking its lowest quarterly figure since 2021. 

Rising domestic and international demand contributed greatly to the September rebound. New orders grew faster than any time since February, and manufacturing output grew faster than it had done in four months. 

Demand was especially high for electronics, food, pharmaceutical, and textile products. 

Export Orders Pick Up 

Overseas demand also improved during September. 

Manufacturers reported stronger orders from customers in Brazil, Europe, the United Arab Emirates and the United States. 

Intermediate goods recorded the strongest improvement during the month, leading growth in both new orders and production. 

Capital goods, on the other hand, recorded comparatively modest increases, with growth slowing from August. 

Factory Hiring Recovers After August Decline 

The improvement in demand also encouraged manufacturers to add workers. 

Employment expanded at its quickest pace since May, marking a turnaround from August when manufacturing jobs had declined. 

Business confidence strengthened as well. Manufacturers became more optimistic about the months ahead as new enquiries and expectations of continued demand improved sentiment. 

Pranjul Bhandari, chief India economist at HSBC, said stronger domestic and overseas demand supported sales and production during September, while hiring resumed at its fastest pace since May. 

Manufacturers Build Inventories 

Companies also stepped up purchases and increased inventories as they prepared for expected sales. 

Finished goods inventories recorded their second-largest increase in nearly 12 years, pointing to a shift away from the leaner stock levels companies had maintained earlier. 

At the same time, manufacturers faced higher costs for electronic components, pharmaceutical products and steel. 

Cost inflation accelerated from August but remained below its long-term average. Selling prices also rose at a quicker pace, although the increase remained below the historical trend. 

With demand, production and hiring all strengthening during September, India’s manufacturing PMI ended the month at 55.1, its strongest reading in seven months.