India’s private sector continued to grow in September, but the pace eased compared to August, according to the HSBC Flash India Composite PMI released today. The headline index fell to 61.9 from 63.2 in the previous month still well above the neutral 50 mark that separates growth from contraction.
Key Findings
- Both the manufacturing and services sectors showed slower growth. Manufacturing PMI dropped from 59.3 in August to 58.5 in September. The services sector index declined from 62.9 to 61.6.
- New business orders continued to rise but at a more modest rate. Some firms pointed to tougher competition and weaker international demand, especially in services.
- Job creation slowed. Only small proportions of firms reported increases in workforce numbers, suggesting companies are being cautious even as business is up.
- Inflationary pressures were mixed. Input cost inflation eased somewhat, but manufacturers raised their selling prices sharply, especially for materials and raw inputs. Meanwhile, the services sector saw a moderation in price hikes.
Business Sentiment & External Factors
- Despite the slight slowdown, business sentiment improved to a seven month high, with many companies optimistic about demand during the upcoming festive season. GST rate cuts were cited as a boost in expectations.
- On the flip side, concerns remain about U.S. tariffs affecting exports, which may dampen growth if international demand stays weak.
What It Means
- The data suggests that while India’s private sector is still expanding at a healthy clip, the pace may be moderating. For policymakers, the challenge will be to maintain momentum without letting cooling demand lead to further slowdown.
- Businesses may delay hiring or expansion until they are more confident in demand stability.
- Consumer spending may get a lift from GST cuts and festive season demand, but exports and industries exposed to global markets may face headwinds.
