India’s manufacturing sector moved in an upward trajectory in September as per the Purchasing Managers' Index (PMI), which rose from 52.3 in August to 53.7 in September, even as price pressures intensified due to raw material shortages and high fuel and transport costs.

This marks the third consecutive month of expansion in manufacturing activity, with consumer goods showing the highest growth in output, international sales picking up momentum and business confidence improving with hopes of increasing production in the year ahead despite the pandemic. A reading of 50 on the PMI indicates no change in activity.

However, there was a lesser change in job for the second straight month. In July, the PMI surveys had reported a rise in hiring for the first time after a 15-month streak of job losses for the sector, but it was followed by a pause on hiring in August.

"Companies continued to purchase extra inputs in September, but jobs were little changed over the month,” said Pollyanna De Lima, economics associate director at IHS Markit which compiles the PMI. “In some instances, survey participants indicated that government guidelines surrounding shift work prevented hiring,” she noted.

Firms reporting growth cited favorable market conditions and improved sales volumes, thanks to the easing of COVID-19 restrictions and strengthening demand conditions. Rising fuel, raw material and transportation prices pushed the overall rate of input cost inflation to a 5-month high. Output prices increased at a slower and only moderate rate, indicating that producers were not passing on the additional cost burden fully to customers.

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