Private sector activity slows down to 9-month low of 59.3 in Sept

Business activity for September

India’s business activity slowed down to 59.3 so far in September from 60.7 a month back, as output and new order growth slowed, according to preliminary results of a private survey.

The HSBC Flash India Composite Output Index fell below 60 for the first time in nine months, though the composite index still traded above its long-run average, showed the survey released on September 23.

"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 eased to 56.7 from 57.5 a month back, while services activity slowed down to 58.9 in September from 60.9 in the previous month.

Despite the easing, the levels remained higher than the long-run average, which also prompted better hiring.

"The rise in employment in the service sector was the steepest since August 2022 as companies responded to higher new orders, often through the hiring of workers on a permanent basis," the report noted.

The decline in activity did not hamper future expectations of firms in both manufacturing and services sector.

"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," the report highlighted.

Both manufacturing and services had held steady in the first quarter, with manufacturing scaling 7 percent growth in Q1FY25 as against 5 percent in the previous year.

On the other hand, services growth had risen to a four-quarter high of 7.3 percent from 6.7 percent in the previous quarter.