India’s factory growth climbs to 7-month high on surging demand, PMI shows

India's manufacturing sector experienced a significant rebound in September, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) climbing to 55.1, marking the highest level since February. This surge in activity was driven by robust demand, which led to a surge in new orders, with the fastest growth since February, particularly in electronic, food, pharmaceutical, and textile products.

The PMI, which indicates growth above 50, also saw a rise in export orders, with clients from Brazil, Europe, the UAE, and the US fueling the demand. Output expansion accelerated to its strongest pace since May, supported by new business orders and high demand, while companies increased their inventory levels to prepare for anticipated sales.

Hiring resumed at its strongest rate since May, recovering from a decline in August, and business confidence rose to a four-month high due to increased inquiries and expectations of sustained demand. However, input cost inflation rose faster than in August, driven by higher prices for electronic components, pharmaceuticals, and steel, though it remained below the long-run average.

Selling prices increased modestly, below trend, and inflation remained above the Reserve Bank of India's (RBI) 4% medium-term target for the third consecutive month.

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