New Delhi [India] October 1 (ANI): India's manufacturing sector continued to expand in September though at a slower pace, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) easing to 57.7 from 59.3 in August, according to survey data released on Wednesday.

The September reading, while marking the weakest improvement since May, remained well above the neutral 50-point threshold, signalling robust expansion in factory activity. The survey, conducted by S&P Global between September 10 and 24, highlighted slower increases in new orders, output and input purchases, while job creation slipped to its lowest level in a year.

Despite the moderation, business optimism surged to a seven-month high, driven largely by the recent cuts in Goods and Services Tax (GST) rates. 'The September headline index softened, but it remained well above the long-term average. 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

The survey found that while new business volumes rose further, the pace of growth was the slowest in four months, weighed down by competitive conditions. Similarly, production levels increased substantially but at the weakest rate since May. International demand, however, provided a boost with export orders from Asia, Europe, the Americas and the Middle East climbing at a faster pace.

On the pricing front, the report flagged the sharpest rise in selling charges in nearly 12 years, outpacing the increase in input costs. Manufacturers attributed the hike to higher outlays on raw materials, labour and transportation. Input cost inflation was led by steeper prices of steel, cotton, batteries and electronic components.

Employment however remained a soft spot with only 2 per cent of companies reporting headcount growth. This marked the slowest pace of job creation in a year, even as sales growth continued to outstrip production. Many firms met demand by depleting their stocks of finished goods, which fell for the ninth time in ten months. In contrast, inventories of raw material purchases rose sharply, registering one of the most pronounced increases in 18 months.

Despite these challenges, sentiment in the sector remained upbeat. Companies cited GST relief measures, marketing investments and stronger customer relations as key drivers supporting production outlook over the next year. (ANI)