September saw a sustained expansion in the Indian manufacturing sector, supported by increases in both output and new orders. However, the rates of expansion eased slightly in both cases. Reflecting greater inflows of new work, Indian manufacturers raised their staffing levels, and at the fastest pace since October 2012.

Meanwhile, post-production inventories reduced during September at a surveyrecord pace. Cost burdens increased further over the month. Consequently, firms raised their output charges to pass on higher input costs to customers. At 51.2 in September, the Nikkei India Manufacturing Purchasing Managers' Index® (PMI®) was unchanged from August.

The reading was indicative of a modest improvement in manufacturing sector business conditions in September, and one that was below the long-run trend (54.1). The PMI has now registered above 50.0 for two successive months. Growth in the consumer and intermediate goods categories offset a contraction in the investment goods sector.

Inflows of new orders increased for the second month in succession during September. The rate of growth softened from the preceding month and was marginal overall. Where an increase was registered, firms cited stronger domestic demand conditions.

Those panellists that recorded lower new business commented on the negative impact of GST. Meanwhile, new export orders decreased, thereby ending a three-month period of expansion as demand from international markets reduced. That said, the rate of contraction was fractional.

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