Growth In India's Business Activity Slows Down In September

As output and new orders rose at the slowest pace in 2024 so far, the growth in India’s business activity slowed down in September in comparison to August 2024. Falling to a nine-month low, the HSBC’s flash India Composite Purchasing Managers Index (PMI) slipped to 59.3 in September from August’s reading of 60.7.

Despite the Index, compiled by S and P Global, showing a slowdown, the overall activity managed to pose strong readings and took the expansionary streak to over three years. The 50- mark separates the expansion from contraction.

The HSBC flash India manufacturing PMI came down to 56.7 in September from 57.5 in August as the rate of improvement was softest since January 2024. Along similar lines, the HSBC flash India services PMI registered a drop from 60.9 reading in August to 58.9 in September 2024.

“The flash composite PMI in India rose at a slightly slower pace in September, marking the slowest growth observed in 2024. Both the manufacturing and service sectors exhibited similar trends during the month. Nevertheless, the pace of growth remained well above the long-term average,” stated Pranjul Bhandari, Chief India Economist at HSBC.

Employment continued to rise solidly amid improved business confidence. The Companies were generally able to keep on top of workloads in September, as shown by backlogs of work rising only fractionally and at the slowest pace in just over two-and-a-half years, as per the index.

The rate of output price inflation remained similarly muted in the latest survey period, coming in just below the series average. The latest rise in charges was only modest and the least marked since February, the report mentioned.

“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, implying a bigger reduction in their margins,” added Bhandari.

As per the report, despite the softer expansion in both output and new orders during the month, companies remain strongly optimistic that business activity will increase over the coming year.