India's manufacturing economy recorded an improvement in growth during September amid firmer gains in new orders, output and employment. Sales rose from both domestic and foreign clients, whilst manufacturers raised their buying activity and bolstered stocks of purchases in anticipation of further growth. On the price front, input costs rose at a stronger rate amid reports of higher prices for fuel and steel. Charges were subsequently increased at a slightly firmer pace. Manufacturers remain confident that output will increase over the coming year.
The Nikkei India Manufacturing Purchasing Managers' Index (PMI) strengthened slightly in September to reach a level of 52.2 (up from 51.7 in August). Solid growth of the manufacturing sector during the latest survey period extended the current run of expansion to 14 months. Underpinning the overall expansion was a firmer increase in levels of new work. Solid growth was linked to gains in both domestic and foreign demand. Indeed, export sales strengthened, with the net gain the best recorded since the start of the year. High product quality was noted as a factor supporting total new order book growth.
With new work increasing, manufacturing production was subsequently raised for a fourteenth successive month. Intermediate goods producers signalled a particularly strong increase in production, although growth was registered across all market groups. Rising new work and increased production helped to drive growth of buying activity during September. In turn, this helped manufacturers to build inventories of purchases. Although modest, growth in pre-production goods was the sharpest recorded by the survey since May 2017.
The manufacturers are confident that output will be higher in 12 months' time. Planned new product launches and developments, plus firmer market demand, all contributed to positive sentiment. However, confidence softened slightly in September and was at a three-month low.
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