Flash Composite PMI Growth In September Slowest This Year

The latest HSBC ‘flash’ PMI survey, compiled by S&P Global, continued to show expansion in economic activity across the Indian private sector during September, although both output and new orders rose at the slowest rates in 2024 so far.

The headline HSBC Flash India Composite Output Index — that measures the change in the combined output of India's manufacturing and service sectors — dipped to 59.3 in September from 60.7 in August. The index pointed to another rapid monthly increase in business activity, albeit one that was the least pronounced in 2024 so far. Softer expansions were seen across both the manufacturing and services sectors.

The HSBC Flash India Manufacturing PMI — calculated from measures of new orders, output, employment, supplier delivery times and stocks of purchases — posted 56.7 in September, down from 57.5 in August. New orders, new export orders and total new business continued to expand but at the slowest pace in the ongoing calendar year, as per respondents.

Companies were generally able to stay 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.

Helping firms to keep up with demand was a further solid expansion of staffing levels, with the rate of job creation ticking up from that seen in August and remaining above the series average. 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. Meanwhile, the pace of jobs growth in manufacturing eased but continued to expand.

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. On the other hand, stocks of finished goods decreased to the largest extent in four months, in part due to a slowdown in growth of production.

The pace of input cost inflation in the Indian private sector remained relatively muted in September, despite rising slightly from that seen in August. Marginally faster increases were seen across both the manufacturing and services sectors. Where costs rose, firms generally linked this to higher prices for raw materials and electricity. The rate of output price inflation remained similarly muted in the latest survey period, coming in just below the series average.

The pace of inflation in the manufacturing sector remained solid, despite easing further from July's recent peak. Meanwhile, service providers increased their charges at the slowest pace since February 2022.

Despite the softer expansions in both output and new orders in September, companies in India remained strongly optimistic that business activity will increase over the coming year. Moreover, confidence strengthened from August and was above the average since the series began in 2012. Firms generally expect to be able to secure new business over the next 12 months, thereby supporting output growth. Sentiment improved in both monitored sectors.