According to a private survey, manufacturing activity in India's private sector recovered in September, reaching a seven-month high due to increased new orders, production volume, and job creation.
HSBC's India manufacturing Purchasing Managers' Index (PMI) rose to 55.1 in September from 52.8 in August. However, the average for the second quarter of 2026-27 was 53.8, which is the lowest figure since the same period in 2021.
This latest figure, which represents a weighted average of new orders, production volume, employment, supplier delivery times, and inventory levels, was slightly below the preliminary Flash India Manufacturing PMI estimate published last month, which stood at 55.7. Despite this, the index remained above the 50 mark, indicating expansion in activity; a figure below 50 signals contraction.
The September figure was also the highest since February, when it reached 56.9. Pranjul Bhandari, Chief Economist for India at HSBC, noted that 'India's manufacturing sector finished the quarter in a more resilient position. The PMI rose to 55.1 in September from 52.8 as higher domestic and international demand stimulated sales and production. Hiring resumed at the fastest pace since May, and manufacturers became more optimistic about the coming months.'
The surge in demand in September led to the sharpest expansion in industrial production in India in four months. The survey showed that sustained demand for electronic, food, pharmaceutical, and textile products contributed to a more significant increase in new orders. Overall sales growth was also the fastest since February.
New export orders also increased faster, with panel respondents specifically noting increased demand from customers in Brazil, Europe, the UAE, and the US. Intermediate goods showed the greatest improvement in September, taking the lead in growth for both new orders and production volume. However, capital goods were the weakest segment, showing only modest growth, which was weaker than in August.
Following the dip in August, job creation accelerated in September, with jobs growing at the fastest pace since May. According to surveyed companies, higher prices for electronic components, pharmaceuticals, and steel increased the overall cost burden in September. The inflation rate accelerated compared to August but remained below the long-term average. Selling price growth also occurred faster but remained below the trend.
Cost pressure was most intense in the intermediate goods category and least among capital goods manufacturers. The consumer goods segment recorded the sharpest increase in selling prices. Bhandari added that 'companies were buying more materials and building up inventories in anticipation of projected sales. Finished goods inventory showed the second-largest growth in nearly 12 years, signaling a clear shift away from lower inventory levels.'