Driven by growth in new export orders, which reached a six-month high, and easing price pressure helped manufacturing sector expand though at a weaker pace.
However, hiring remained subdued and business confidence weak, according to the HSBC India manufacturing purchasing managers index that dropped to 54.7, the survey released on Monday said.
The seasonally adjusted index printed in at 55.1 in September and remained below the flash figure readings of 54.9. The index was comfortably above the neutral mark of 50 and its long-run average, signalling a strong improvement in the health of the sector.
“A sustained improvement in demand was reflected in a further sharp rise in new business. Growth eased only marginally from September’s seven-month high and remained strong by historical standards. Panel members cited favourable demand trends, new client wins and successful marketing campaigns,” the survey said.
One reason for the continued momentum is the robust growth in exports as new orders increased at the fastest rate in six months. Companies reported gains from a broad range of destinations, including Bangladesh, Canada, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka, England, the US and the UAE, the survey said.
“Strong international demand pushed growth of new export orders to a six-month high, supporting a robust rise in output,” said Pranjul Bhandari, HSBC India chief economist, said. “Producers also increased input inventories to the greatest extent in eight months, building precautionary buffers to mitigate potential shortages and meet rising production requirements amid a volatile global environment. Though some material and energy costs increased, overall input and output price pressures eased slightly from the previous month,” she added.