India Manufacturing Rebounds with Strong September Growth

India’s manufacturing sector regained significant momentum in September, snapping a three-month cooling period as factory activity hit a seven-month high. The HSBC India Manufacturing Purchasing Managers' Index (PMI) climbed to 55.1, a notable recovery from August's 52.8, which had marked a five-year low. While the final figure trailed the flash estimate of 55.7, it remains well above the 50.0 threshold that signals industrial expansion.

Driving this resurgence was a surge in new orders, particularly within the electronics, food, pharmaceutical, and textile sectors. International demand also played a pivotal role, with manufacturers reporting increased exports to the US, Europe, Brazil, and the UAE. This uptick in business prompted firms to ramp up production and accelerate hiring, reversing the job losses seen in August.

Supply chain activity intensified as companies bolstered their inventories of raw materials and finished goods to meet projected demand, marking one of the largest stock increases in over a decade. Business confidence among manufacturers has climbed to a four-month peak, fueled by a steady stream of new inquiries. While input costs for steel and electronic components have risen, leading to a modest increase in selling prices, inflation remains manageable relative to long-term averages. Looking ahead, the market remains focused on the Reserve Bank of India’s policy stance as it navigates ongoing inflationary pressures.