New Delhi, Oct 1 (PTI) India's manufacturing sector activity eased in September, as new orders, output and input buying rose at the slowest rates in four months, while job creation retreated to a one-year low, a monthly survey said on Wednesday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index moderated from 59.3 in August to 57.7 in September, pointing to the weakest improvement in the health of the sector since May, even as tax relief has boosted business optimism for the year ahead.

In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

"The September headline index softened, but it remained well above the long-term average," said Pranjul Bhandari, Chief India Economist at HSBC.

The September PMI data highlighted continued growth across India's manufacturing industry, albeit with a mild loss of momentum, the survey said, adding that growth was curbed by competitive conditions.

The survey further noted that there was a pick-up in growth of international orders at the end of the second fiscal quarter, as Indian manufacturers welcomed improvements in demand from Asia, Europe, the Americas and the Middle East.

"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," Bhandari said.

On the price front, the survey, which took place between 10 and 24 September, indicated quicker increases in input costs and selling prices. The overall rate of inflation was solid and the quickest since May, though it remained below its long-run average.

Monitored firms suggested that greater outlays on labour, raw materials and transportation prompted hikes to output prices, which were facilitated by positive demand trends. The rate of charge inflation reached a near 12-year high.

Going ahead, Indian companies continued to signal upbeat forecasts for production in the coming 12 months. Moreover, the overall level of confidence rose to a seven-month high.

"Business confidence, as indicated by expectations for future output, showed a big jump in September, potentially reflecting optimism about the boost in demand from the cuts in goods and services tax (GST), although US tariffs remain a strong headwind to the economy," Bhandari said.

Companies were strongly confident regarding the outlook for production, with changes in GST (goods and services tax) rates boosting optimism.

On the jobs front, Indian goods producers also took on extra staff in September, but the rate of job creation was modest and the slowest in a year. In fact, only 2 per cent of companies indicated headcount growth.

"Despite weak job creation relative to sales growth, outstanding business volumes increased only marginally in September. The pace of accumulation was below that seen in August and its long-run average," the survey said.

The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. PTI DRR DR DR

GST rate changes boost manufacturing confidence, while international trade tariffs remain a significant headwind to demand. India's manufacturing PMI showed moderated expansion in September as new orders, output and input buying rose at the slowest rates in four months while employment growth was modest. Input costs and selling prices increased more quickly, and firms reported stronger production forecasts and higher confidence linked to GST rate changes, though trade tariffs remained a notable headwind to external demand.