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  1. India's manufacturing activity falls to 4-month low, factory prices jump at fastest rate in 12 years

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India's manufacturing activity falls to 4-month low, factory prices jump at fastest rate in 12 years

Upstox

2 min read | Updated on October 01, 2025, 12:17 IST

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SUMMARY

Despite the slowdown, business confidence reached a seven-month high, buoyed by expectations of stronger demand, marketing investments, and GST cuts.

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India’s manufacturing sector grew at its slowest pace in four months in September, with the HSBC India Manufacturing PMI falling to 57.7 from 59.3 in August.

India’s manufacturing activity expanded at its slowest pace in four months in September as growth in new orders and output eased, while firms raised selling prices at the fastest rate in nearly 12 years, a monthly survey said on Wednesday.

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The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, slipped to 57.7 in September from 59.3 in August. While still comfortably above the 50-mark that separates expansion from contraction, the latest reading pointed to the weakest improvement in the sector’s health since May.

“New export orders increased at a faster rate in September, indicating demand outside of the US might be offsetting any decline in demand from the US as a result of tariffs,” said Pranjul Bhandari, chief India economist at HSBC. “Business confidence… showed a big jump, potentially reflecting optimism about the boost in demand from the cuts in goods and services tax.”

The survey, conducted between September 10 and 24, showed output, new orders and input purchases all grew at the softest pace in four months, while job creation slowed to a one-year low as only 2% of firms reported hiring.

Despite easing momentum, the overall level of confidence among manufacturers rose to a seven-month high, supported by expectations of stronger demand, marketing investments and GST rate cuts.

On the price front, input costs rose solidly in September, driven by higher battery, cotton, steel and electronic component prices. Firms passed on these costs to customers, lifting output charges at the sharpest pace since October 2013.

Manufacturers continued to take on additional staff in September, but employment growth was modest and limited to only 2% of surveyed firms.

"Despite weak job creation relative to sales growth, outstanding business volumes increased only marginally in September. The pace of accumulation was below that seen in August and its long-run average," the survey said.

Stocks of finished goods fell for the ninth time in 10 months as firms relied on inventories to meet sales, while purchases of inputs rose at one of the sharpest rates in 18 months.

The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

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Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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