The flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global and HSBC, dropped to 59.3 this month from August’s 60.7 final reading.

According to an HSBC survey, India’s business activity growth slowed to a nine-month low in September, attributed to reduced demand and increased costs. Despite this, the service sector saw the fastest job growth in two years. 

The manufacturing and services sectors have shown similar trends, sustaining an expansion streak for over three years.

According to a survey, India’s business activity growth slowed to a nine-month low in September due to decreased demand and higher costs. The service sector experienced its fastest job growth in two years.

Overall activity remained robust, extending the expansionary streak for over three years. The 50-mark indicated expansion rather than contraction.

HSBC’s chief India economist, Pranjul Bhandari, observed that the flash composite PMI in India grew slightly slower in September, marking the slowest growth observed in 2024. The manufacturing and service sectors displayed similar trends during the month, with growth rates remaining well above the long-term average.

The dominant services industry’s index fell to 58.9 this month from 60.9 in August, its lowest since November, while the manufacturing index decreased to an eight-month low of 56.7 from 57.5.

Growth was affected by a softer rise in new business and orders for both domestic and overseas markets. Manufacturing output expansion was largely unchanged from August.

Despite a slight increase in input costs, companies refrained from fully passing on the higher costs to customers, resulting in muted prices charged compared to the previous month. Raw materials and electricity prices were noted as areas with higher costs.

Bhandari noted that input cost inflation rose slightly quicker in September. Rates of increased output charges slowed in both sectors, with manufacturers experiencing a larger slowdown, indicating a larger margin reduction.

The Reserve Bank of India (RBI) may be cautious, 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 held from October 7-9.

However, firms continued to hire additional staff this month, driven by an optimistic business outlook for the coming 12 months, with expectations of securing new business.

Employment in the services sector saw the sharpest rise since August 2022. Manufacturing jobs increased for a seventh consecutive month, albeit slightly slower than in August.

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