India Manufacturing PMI Hits Seven-Month High in September on Strong Demand and Hiring
India’s private sector manufacturing activity rose to a seven-month high in September, as new orders, output, and hiring accelerated, according to a survey released on Thursday. The headline index climbed to 55.1 from 52.8 in August, marking the 59th consecutive month of expansion above the crucial 50-point threshold.
The average for the second quarter of FY27 stood at 53.8, registering its lowest level since the same period in 2021. While the September figure improved from August, it landed slightly below the Flash India Manufacturing PMI estimate of 55.7 released the prior month, yet remained well above the 50 mark that separates contraction from expansion.
Demand Dynamics and Sectoral Performance Drivers
Stronger domestic and overseas demand directly lifted sales and production volumes across factories during the final month of the quarter. Pranjul Bhandari, chief India economist at HSBC, noted that the factory sector ended the period on a firmer footing as firmer demand for electronic, food, pharmaceutical, and textile products drove a sharper increase in new business intakes. Total sales experienced their fastest upturn since February, when the index touched 56.9.
New export orders expanded at a quicker pace, with survey respondents highlighting heightened demand from clients in Brazil, Europe, the United Arab Emirates, and the United States. Intermediate goods led the growth rankings for both new orders and output, showing the strongest performance across manufacturing categories. Capital goods lagged as the weakest link, posting only modest increases that fell short of August levels.
| Metric / Category | September 2026 Reading | Comparison / Prior Period |
|---|---|---|
| HSBC India Manufacturing PMI | 55.1 | Up from 52.8 in August 2026 |
| Q2 FY27 Average PMI | 53.8 | Lowest since Q2 2021 |
| Flash PMI Estimate (September) | 55.7 | Released the previous month |
| Employment Index | Fastest pace since May | Recovered after August dip |
| Top-Performing Category | Intermediate Goods | Strongest new orders and output |
| Lagging Category | Capital Goods | Modest increases, weaker than August |
Employment Recovery and Input Cost Pressures
Employment creation rebounded following a brief dip in August, pushing job growth to its highest pace since May. Surveyed manufacturing firms expanded headcounts to manage rising workloads, while input costs mounted due to higher prices for electronic components, steel, and pharmaceutical items. The overall cost burden accelerated from August, though the rate of inflation stayed below its long-run average.
Selling prices increased at a quicker pace as well, though they similarly remained below trend. Cost pressures proved most intense within intermediate goods categories, while capital goods producers faced the weakest price pressures. Conversely, the consumer goods segment recorded the sharpest upturn in selling prices as manufacturers passed incremental costs down the value chain.
Corporate inventory management strategies shifted accordingly. Bhandari observed that companies purchased more raw materials and built up stocks to prepare for anticipated sales, leading finished goods inventories to record their second-largest increase in nearly 12 years.