Manufacturing Momentum Cools, But Export Orders Show Strong Growth

Due to the fall in production, production activity in the nation contracted to a four-month low during September. Employment generation dipped to a one-year low. Seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) dropped from 59.3 in August to 57.7 in September, representing the poorest improvement in the health of the sector since May.

Nonetheless, tax relief has encouraged business confidence over the next year. A reading of PMI in excess of 50 indicates growth, and below 50 indicates contraction. The data from the PMI reported further growth within the manufacturing sector, though at a slightly reduced pace.

International orders increased at the end of the second quarter. Indian manufacturers saw improved demand from Asia, Europe, the US, and the Middle East. New export orders rose sharply in September, suggesting that demand from other countries could offset any decline in demand from the US as a result of tariffs.

The survey, conducted between September 10 and 24, indicated a sharp increase in input costs and selling prices. Higher expenditure on labor, raw materials, and transportation fueled the rise in production prices.

Indian companies have enthusiastically forecasted production over the coming 12 months. Confidence levels reached a seven-month high. Expectations for future production indicate that business confidence saw a significant jump in September, likely reflecting optimism about increased demand from the Goods and Services Tax (GST) cut.