India's factory activity waned in September to a seven-month low as new orders and output increased at a slower pace, a survey showed on Thursday.
The Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled monthly by financial information services firm Markit, slowed to 51.2 in September from 52.3 in August.
The index, previously known as HSBC manufacturing PMI, measures the health of the manufacturing sector based on surveys of private sector companies. A reading above 50 denotes expansion.
According to the report, September data pointed to the weakest rise in production since May last year, with the slowdown evident across the three broad areas of the manufacturing economy.
The report said that growth in new work moderated to the weakest since June, reflecting challenging economic conditions.
There was some disappointing news on the employment front as well, with manufacturers shedding jobs in September.
The PMI data comes a day after government figures showed that output of eight core industries in August grew 2.6 per cent on the back of higher cement production and power generation.
For the July-September quarter, the PMI averaged 52.1 compared with 51.8 in the previous quarter.
This indicates better prospects for the economy for the July-September quarter. "According to PMI data, the manufacturing sector looks set to provide a stronger contribution to GDP than it did in the April-June quarter," said Pollyanna De Lima, economist at Markit.
With the Reserve Bank of India slashing interest rates by 50 basis points earlier this week, manufacturing is likely to see a further boost in activity with demand and investment expected to pick up in coming months.