New Delhi [India], October 1 (ANI): India's manufacturing sector is expected to maintain improving demand momentum in the coming months as new orders and output strengthened in September, while manufacturers turned more optimistic about future sales, according to the HSBC India Manufacturing PMI released by S&P Global. 

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to 55.1 in September from 52.8 in August, marking the strongest improvement in the health of the manufacturing sector in seven months. The survey also showed that business confidence rose to a four-month high, supported by new enquiries and expectations of favourable demand conditions.

"India's factory sector ended the quarter on a firmer footing. The PMI rose to 55.1 in September, up from 52.8, as stronger domestic and overseas demand lifted sales and production. Hiring resumed at its fastest pace since May," said Pranjul Bhandari, Chief India Economist at HSBC.

The increase in demand was broad-based, with stronger demand for electronic, food, pharmaceutical and textile products driving a sharper rise in new business. New export orders also increased at a faster pace, with firms reporting greater demand from customers in Brazil, Europe, the UAE and the US.

The pickup in new orders supported the sharpest expansion in factory production in four months. Intermediate goods emerged as the strongest-performing segment, while capital goods recorded only modest increases that were weaker than in August.

Employment growth also resumed in September after a decline in the previous month. The pace of job creation was solid and the strongest since May, while manufacturers increased their purchases of materials and built up inventories.

"Manufacturers became more optimistic about the months ahead. Companies bought more materials and built up stocks to prepare for anticipated sales. Finished-goods inventories recorded their second-largest increase in nearly 12 years, signalling a clear shift from leaner stock levels," Bhandari said.

Firms' output expectations improved in September, with positive sentiment reaching a four-month high. Surveyed manufacturers cited new enquiries in the pipeline and expectations that demand conditions would remain favourable.

Meanwhile, input cost inflation accelerated during September, driven by higher prices for electronic components, pharmaceutical items and steel. Selling prices also increased at a faster pace, although both input and output price inflation remained modest compared with historical trends. (ANI)