A slowdown in business activity across India’s manufacturing and services sectors reduced the pace of private sector expansion in September, according to a survey released by HSBC on Monday.
The flash composite Purchasing Managers’ Index (PMI) dropped to 59.3 in September, its lowest reading in 2024, down from 60.7 in August. Despite this decline, the index—which measures month-on-month changes in combined output from the manufacturing and services sectors—remained above the neutral 50-point threshold that separates contraction from expansion, marking the 38th consecutive month of growth.
"The survey signalled ongoing strong growth across the Indian private sector during September, although both output and new orders rose at the slowest rates in 2024 so far," the report noted. "Meanwhile, employment continued to rise solidly amid improved business confidence."
Pranjul Bhandari, chief India economist at HSBC, highlighted that both sectors exhibited slower growth. "The flash composite PMI in India rose at a slightly slower pace in September, marking the slowest growth observed in 2024, as both the manufacturing and service sectors exhibited similar trends during the month," she said. "Nevertheless, the pace of growth remained well above the long-term average."
While growth in new orders moderated slightly, hiring levels rose at a faster pace. "The rise in employment in the service sector was the steepest since August 2022, as companies responded to robust growth in new orders," Bhandari added.
On the price front, both input costs and output prices remained relatively stable, with service providers raising charges at the slowest pace in over two-and-a-half years. "The pace of input cost inflation in the Indian private sector remained relatively muted in September, despite rising slightly from August. Marginally faster increases were seen across both manufacturing and services sectors, with firms attributing cost rises to higher prices for raw materials and electricity," the survey noted.
Bhandari also pointed out that manufacturers experienced a larger slowdown in output price increases, implying a bigger reduction in their profit margins. "On the price front, input cost inflation rose at a slightly quicker pace in September. Rates of increase in output charges slowed in both sectors, with manufacturers experiencing a larger slowdown," she said.
The survey further indicated a solid expansion of staffing levels in response to rising demand. "The rise in employment in the service sector was the steepest since August 2022 as companies responded to higher new orders, often through the hiring of workers on a permanent basis," it said.
Manufacturing firms also saw a slower pace of job growth, but increased purchasing activity contributed to higher input stocks. "As well as taking on extra staff, Indian manufacturers also expanded their purchasing activity during September. This helped to support a further marked increase in stocks of inputs as suppliers continued to deliver goods in a timely manner," the report added.
The flash PMI data, based on 75-85 per cent of the responses from a survey of 800 services and manufacturing firms, serves as an early indicator of business trends. The final manufacturing PMI for September is due to be released on October 1, with projections suggesting it will remain steady at 56.5. The services and composite PMI figures will be released on October 4.
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