Growth in India’s business activity slowed to a nine-month low in September amid a slight cooling in demand and an uptick in costs, according to a survey that also showed services sector jobs rose at the fastest pace in two years.<\/p>\n
HSBC’s flash India Composite Purchasing Managers’ Index, compiled by S&P Global, slipped to 59.3 this month from August’s final reading of 60.7.<\/p>\n
However, overall activity remained strong, taking the expansionary streak – the 50-mark separating expansion from contraction – to over three years.<\/p>\n
“The flash composite PMI in India rose at a slightly slower pace in September, marking the slowest growth observed in 2024,” noted Pranjul Bhandari, chief India economist at HSBC.<\/p>\n
“Both the manufacturing and service sectors exhibited similar trends during the month. Nevertheless, the pace of growth remained well above the long-term average.”<\/p>\n
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- \nAlso read: Manufacturing PMI drops to 57.5 in August, job creation slows<\/b><\/li>\n<\/ul>\n
The dominant services industry’s index fell to 58.9 this month from 60.9 in August, its lowest since November, while the manufacturing one cooled to an eight-month low of 56.7 from 57.5.<\/p>\n
Overall growth was hurt by a softer rise in new business and orders – key gauges for demand – for both services and goods providers in domestic as well as overseas markets. The pace of expansion in manufacturing output was largely unchanged from August.<\/p>\n
Highlighting softer demand, companies refrained from fully passing on a slight acceleration in input costs to customers as prices charged were muted compared to last month. Firms noted higher raw materials and electricity prices.<\/p>\n
“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.<\/p>\n
That is likely to keep the Reserve Bank of India on edge as uncertainty over the inflation outlook has increased despite registering below its medium-term target of 4.0% for a second month in August. The next policy meeting will be from October 7-9.<\/p>\n
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- \nAlso read: Wholesale inflation dropped to 4-month low of 1.31% in August<\/b><\/li>\n<\/ul>\n
However, firms continued to hire additional staff this month as the business outlook for the coming 12 months was upbeat, driven by expectations of securing new business.<\/p>\n
The rise in employment in the services sector was the sharpest since August 2022 and manufacturing jobs increased for a seventh consecutive month, albeit at a slightly easier pace than in August.<\/p>\n
- \nAlso read: Wholesale inflation dropped to 4-month low of 1.31% in August<\/b><\/li>\n<\/ul>\n