Business activity falls to nine-month low in September

New Delhi Private sector business activity in India, as seen in the Flash Purchasing Managers’ Index (PMI), fell to a nine-month low in September, dragged down by weaker output growth in the manufacturing sector. The HSBC Flash India Composite PMI, a seasonally adjusted measure, fell to 59.3 in September from 60.7 in August, according to data released by S&P Global.

Flash PMI values are released a few days before the actual PMI numbers and include 80%-90% of the responses used to calculate the final PMI readings. India became the eighth country to have a Flash PMI in January 2024. The index, compiled by S&P Global based on responses to questionnaires sent to survey panels of about 400 manufacturers and 400 service providers, measures output growth in the manufacturing and services sectors.

The composite index reading in September was the lowest this calendar year. The Flash Manufacturing PMI also fell to an eight-month low of 56.7 in September from 57.5 in August. The Flash Services PMI also fell to its lowest level since November 2023 to 58.9 from a final reading of 60.9 in August.

“India’s Flash Composite PMI rose at a slightly slower pace in September, marking the slowest growth seen in 2024. Both manufacturing and services sectors followed similar trends during the month. However, the pace of growth remained well above its long-term average,” Pranjul Bhandari, chief India economist at HSBC, said in a note issued by S&P Global.

Of course, September’s PMIs remained above 50, indicating expansion from the previous month’s activity levels. This reading has been in expansionary territory for more than three years.

Employment in the services sector continued to rise rapidly, with the rate of expansion in September being the fastest since August 2022, but the pace of employment growth in the manufacturing sector slowed, the release said.

“New order growth slowed slightly in September, but employment rose at a faster pace, supported by improved business confidence. In fact, employment growth in the services sector was the fastest since August 2022 as firms responded to a solid increase in new orders. On the price side, input cost inflation rose at a slightly faster pace in September. Input charge growth rates slowed in both sectors, with manufacturers seeing a larger slowdown, implying a larger reduction in their margins,” Bhandari said in her note.

PMI indicators for the manufacturing sector will be published on October 1, and for the services sector – on October 4.