India’s business activity eases in September but PMI still above 60

PMI data for September

India’s business activity remained resilient but eased a bit in September, with the Flash HSBC India Composite PMI Output Index coming in at 61.9 , lower than 63.2 in August, according to preliminary survey data released on September 23.

The index has now stayed above the 60 mark for four consecutive months, underscoring the economy’s resilience despite rising global uncertainties.  The performance was supported by both manufacturing and services, however, they saw a marginal easing, slipping to 58.5 and 61.6 respectively, from 59.3 and 62.9 in the previous month.

"The manufacturing PMI moderated but its pace of expansion remains healthy. The imposition of the 50% tariff rate by the US on India likely resulted in a slower rise in new export orders over Aug-Sep. This comes on the back of strong frontloading of exports to the US since early-2025," said Pranjul Bhandari, Chief India Economist at HSBC.

The robust showing comes on the heels of India’s GDP growth accelerating to 7.8 percent in the first quarter of FY26, the fastest pace in five quarters. The second quarter is also expected to post a 7 percent-plus growth number, chief economic Adviser V Anantha Nageswaran said on September 22 at Network18’s Reforms Reloaded summit.

"New domestic orders rose for the last two months, likely on the back of announcements of lower GST rates. All said, the impact of higher tariffs have been somewhat offset by lower tax rates in the data so far," Bhandari noted.

Jobs concerns, but future perfect

The worry is softening of job growth in the months leading up to the festive season.

"Although private sector workforces continued to increase at the end of the second fiscal quarter, the rate of expansion receded from August and was moderate overall," said HSBC, with less than 5 percent of firms indicating job creation.

On the price front, firms retained some of the pricing power as selling prices.

"Factory gate charges rose to the greatest extent in over 12-and-a-half years, but a substantial slowdown in the service economy pulled the aggregate rate of inflation lower," HSBC noted in its report.

Future confidence was at a seven month high.

"Capacity expansion, competitive pricing, demand strength, efficiency gains and marketing efforts featured in the anecdotal evidence as the main determinants of optimism. Some firms also hope to benefit from the GST (goods and services tax) rate cut," HSBC said.