India’s private sector economy hit a nine-month low in September due to slower manufacturing and services activity, despite a rise in employment and improved business confidence. The headline flash composite PMI fell to 59.3 from 60.7 in August, with both sectors showing similar trends. Slower manufacturing and services business activity in September pulled down India’s overall private sector economy to a nine-month low, even as employment continued to rise amid improved business confidence, a private survey showed Monday.The headline flash composite Purchasing Managers’ Index (PMI) declined to 59.3 in September, lowest in 2024, from an upward revised figure of 60.7 in August. A reading above 50 on the index indicates an expansion in activity. Flash PMI records 75-85% of the total 800 PMI survey responses by services and manufacturing firms received every month.
“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,” said Pranjul Bhandari, Chief India Economist at HSBC. The manufacturing activity slowed to 56.7 in September from 57.5 a month ago, whereas services activity declined to 58.9 from 60.9. While growth in new orders moderated, hiring levels rose at a faster pace, supported by improving business confidence. “In fact, the rise in employment in the service sector was the steepest since August 2022, as companies responded to robust growth in new orders,” Bhandari said. 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. As per the report, 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. On employment, the survey showed that helping firms keep up with demand was a further solid expansion of staffing levels, with the rate of job creation quickening from that seen in August and remaining above the series average. The increase in employment in the services 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 declined. Along with taking on extra staff, Indian manufacturers expanded their purchasing activity during September. This helped support a further marked increase in stocks of inputs as suppliers continued to deliver goods in a timely manner.
