India's private sector activity reached a three-month high in September, driven by improved production across both manufacturing and services sectors, alongside growth in new orders and hiring.
According to the HSBC-released Purchasing Managers' Index (PMI) flash survey, compiled by S&P Global on Wednesday, the index rose to 56.5. This figure recovered from a four-year low of 54.3 recorded in August. The index has remained above the 50 mark, which separates expansion from contraction, for the 62nd consecutive month.
Companies in India's private sector noted faster growth in the overall volume of new orders in September, supported by improving demand in both monitored sectors, with manufacturers showing a more significant improvement, as indicated in the survey.
Sales growth was reported to have surpassed service sector figures, reaching a seven-month high. Marketing efforts stimulated order intake among service providers due to increased demand in real estate, transport, travel, software, and digital solutions. Goods manufacturers reported strengthening demand for aluminum, electronics, food products, pharmaceuticals, and new product models, according to S&P.
India's Flash Manufacturing PMI grew to 55.7 in September compared to 52.8 in August. India's Flash Services PMI rose to 55.8 from 54.1. Pranjul Bhandari, Chief Economist at HSBC, noted that 'private sector activity has gained momentum, aided by strengthening production. Output and new domestic orders grew faster. Renewed tensions in the Middle East have prompted firms to build buffers to manage uncertainties.'
New export orders continued to grow, although the pace of expansion slowed to its lowest in almost three years. Overall job creation increased in September as rising output and new orders prompted companies to increase hiring. The survey showed that 'job creation was recorded in both the manufacturing and services sectors, with expansion rates being generally similar.'
The rate of raw material cost inflation in the private sector fell to its lowest level since January. S&P explained that 'milder price pressures in the services sector largely offset the rise among manufacturers. Firms reporting an increase in overall cost burden attributed this to higher expenditures on electrical components, food, fuel, metals, pharmaceutical ingredients, and technological resources.'
Overall holiday price inflation remained virtually unchanged at the composite level in September. Although stronger tariff growth was observed at the plant level, service companies recorded slower growth in fees charged to them.
Bhandari added that 'raw material procurement accelerated, and the finished goods inventory index reached 11.5 months high. Price pressure intensified for manufacturers, while product price inflation is gaining pace, signaling a renewed effort to protect margins.'
The Flash PMI provides an early estimate of final PMI figures for manufacturing, services, and the composite index, based on approximately 90 percent of monthly survey responses. Final PMI data for manufacturing will be published on October 1, and for services on October 6.
