Manufacturing activity improved in September on the back of stronger gains in new orders, output, and employment, according to a private sector survey.
The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 52.2 in September from 51.7 in August. A reading above 50 indicates an expansion while one below 50 denotes a contraction.
“India’s manufacturing economy recorded an improvement in growth during September amid firmer gains in new orders, output and employment,” the report said. “Sales rose from both domestic and foreign clients, whilst manufacturers raised their buying activity and bolstered stocks of purchases in anticipation of further growth.”
A significant driver of the growth in activity in September was the growth in new orders, the report added, saying that this strong 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,” the report said. “High product quality was noted as a factor supporting total new order book growth.”
Dollar, a concern
However, the stronger U.S. dollar continued to raise the relative price of goods such as steel and fuel, thereby raising input costs for manufacturers, the report noted.
“Rising prices continued to weigh on sentiment, with confidence dropping a little to reach a three-month low,” Paul Smith, economics director at IHS Markit and author of the report, said. “Nonetheless, on balance, firms remain confident that output will continue to rise, buoyed by recent new business wins and expectations this will continue over the next 12 months.”
