Companies upped the pace at which additional materials were bought, and more jobs were created, partly reflecting positive expectations regarding the outlook. Input stocks rose again, while finished goods inventories expanded for the first time in nine months.

Meanwhile, subdued cost pressures compared with a marked upturn in selling charges. Up from 59.1 in July to 59.3 in August, the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) indicated the fastest improvement in operating conditions for 17-and-a-half years.

The upward movement in the headline figure largely reflected an acceleration in growth of production volumes. Incoming new orders rose to broadly the same extent as in July, which was the fastest in 57 months.

Underlying data showed a softer increase in international orders placed with Indian manufacturers. One factor that supported these positive spending trends was confidence among manufacturers that output would increase over the course of the coming 12 months.

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