India's factory activity expanded at a slower pace in September, marking the slowest growth in five months.

However, the expansion remained solid, driven by strong demand that boosted business confidence to its highest level this year.

This information comes from a survey by S&P Global, a research company.

The survey, known as the Manufacturing Purchasing Managers' Index (PMI), dropped from 58.6 in August to 57.5 in September.

While this was a bit lower than experts expected, it's still good news because it's the 27th month in a row where the index has been above 50.

Pollyanna De Lima, an expert at S&P Global, said that India's factories slowed down a bit in September because they received fewer new orders, which affected how much they produced. However, the future still looks bright for these factories.

Despite the slowdown, companies saw more demand for their products both in India and from other countries like Asia, Europe, North America, and the Middle East. This demand helped businesses feel optimistic, and their confidence levels reached a nine-month high.

Because companies were doing well, they hired more people, although not at a very fast rate. Still, this shows that businesses are growing, and they've been growing for six months in a row.

The cost of materials used to make products increased, but not very quickly. This was partly because the prices of materials like aluminum and oil were lower. Despite the increased costs, businesses could sell their products at higher prices, which helped them make a profit.

However, even though costs didn't rise quickly, there's still a concern about inflation, which is when prices for everything go up.

In August, the inflation rate in India was 6.83 per cent, which is a bit lower than it was in July but still higher than what the government wants. The government is trying to keep inflation between 2 per cent and 6 per cent.

Experts believe that the Reserve Bank of India will not increase the interest rates for the rest of this year. Instead, they might reduce rates slightly in 2024 to help businesses and the economy grow.