The Indian manufacturing Lion roars again

India's manufacturing upturn was sustained in September, as a further increase in order books underpinned growth of output and purchasing activity. That said, rates of expansion eased in all cases. One area of strength was external demand, with firms noting the strongest rise in new export orders since July 2015. The latest PMI figures also showed an intensification of inflationary pressures. Both input costs and output charges increased at quicker rates.

Posting above the crucial 50.0 threshold for the ninth consecutive month, the seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index^TM (PMI^TM) - a composite single-figure indicator of manufacturing performance - highlighted a further improvement in the health of the sector. Down from 52.6  in  August  to  52.1  in  September,  however, the  latest  reading  indicated  that  growth  lost  some momentum.

One   factor   contributing   to   the   slowdown   in the  sector  was  a  softer  increase  in  new  business

inflows. Whereas improved client demand supported the upswing in order books, growth was reportedly hampered by strong competition for new work. Foreign  new  orders  for  Indian-manufactured goods expanded markedly in September, and at the quickest rate in 14 months. Panellists commented on successful price negotiations with clients.

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