India’s Manufacturing PMI Slips to 57.7 in September Amid Rising Selling Prices

India’s manufacturing sector continued to expand in September, but the pace of growth slowed compared with the previous month. According to data compiled by S&P Global, the Manufacturing Purchasing Managers’ Index (PMI) stood at 57.7 in September, down from 59.3 in August. 

While this marks the weakest improvement in sector health since May, the PMI remains comfortably above the neutral 50 threshold that separates expansion from contraction.

Slowdown Driven by Softer New Orders

The September PMI came in below the preliminary estimate of 58.5. The slowdown was largely driven by weaker new orders and output growth, both recording the slowest expansion in four months. 

Survey respondents highlighted rising competitive pressures as a factor weighing on growth. Despite this, export orders saw an uptick compared with August, suggesting that global demand may be partially offsetting domestic challenges.

Employment Growth Slows

Job creation in the manufacturing sector dropped to its lowest level in a year, with only two per cent of companies reporting workforce expansion. August had seen employment growth for the eighteenth consecutive month, marking a historically strong trend. Although September’s slowdown represents the weakest pace since November 2024, employment growth remains robust by long-term standards.

Input Costs and Selling Prices Surge

The survey revealed a sharp rise in input costs during September, particularly in sectors such as batteries, cotton, electronic components, and steel. This increase in production costs translated into higher selling prices, which rose at the fastest rate since 2013. Output charge inflation hit a near 12-year high, reflecting ongoing pressure on manufacturers to pass rising costs onto buyers.

Export Orders Show Strength

International demand remained a bright spot for the sector. Manufacturers reported growth in export orders across regions including Asia, Europe, the Americas, and the Middle East. This indicates that while domestic demand may be affected by competitive pressures and policy changes, global markets continue to support production growth.

Business Confidence Remains Strong

Despite the slowdown in output and employment growth, business sentiment improved significantly, reaching a seven-month high. Optimism was driven by factors such as recent cuts in Goods and Services Tax (GST) rates and sustained global demand, indicating that manufacturers expect stronger performance in the near future.

Read more:ADB Cuts India's FY26 Growth Forecast to 6.5% Due to Tariff Impact

Conclusion

The September PMI data highlights a sector that is expanding but facing headwinds from rising costs, competitive pressures, and external factors. While growth has moderated, strong export demand and high business confidence suggest that India’s manufacturing sector continues to be a key contributor to economic activity.

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