India’s private sector business activity rose to a three-month high in September as output improved across both the manufacturing and services sectors, according to HSBC’s flash Purchasing Managers’ Index (PMI) survey released on Wednesday.
Compiled by S&P Global, the index rose to 56.5, recovering from a four-year low of 54.3 in August. It remained above the 50 mark separating expansion from contraction for the 62nd consecutive month.
Firms across India’s private sector recorded a faster increase in total new business during September as demand improved across both monitored sectors, with manufacturers showing greater improvement, the survey noted.
“Sales growth remained above that recorded by services companies and hit a seven-month high,” it added.
Marketing efforts boosted order intakes among service providers, with demand rising for property, transport, travel, software and digital solutions. Goods producers reported stronger demand for aluminium, electronics, food, pharmaceuticals and new product models, S&P said.
The HSBC Flash India Manufacturing PMI rose to 55.7 in September from 52.8 in August. The Flash India Services PMI Business Activity Index rose to 55.8 from 54.1.
“Activity in the private sector gained momentum, led by stronger manufacturing. Output and new domestic orders rose at faster rates. Renewed tensions in the Middle East have once again led firms to build buffers to manage the uncertainties,” said Pranjul Bhandari, chief India economist at HSBC.
New export orders continued to rise, but the rate of expansion fell to the slowest in nearly three years.
Overall employment generation rose in September as growth in output and new orders led firms to increase hiring. “Job creation was recorded in both the manufacturing and service sectors, with rates of expansion broadly similar,” the survey said.
The rate of input cost inflation across the private sector eased to its lowest level since January.
“Softer cost pressures at services companies more than offset a pick-up among manufacturers. Firms that signalled an increase in overall cost burdens attributed this to greater outlays on electrical components, foodstuff, fuel, metals, pharmaceutical ingredients and technology resources,” S&P said.
Selling price inflation was broadly unchanged at the composite level in September. While a stronger increase was seen in factory-gate charges, services firms saw a slower rise in charges levied.
“Input purchases picked up pace and the stocks of finished goods index is now at an 11-and-a-half-year high. Price pressures firmed at manufacturers, with output price inflation gathering pace, signalling a renewed push to protect margins,” Bhandari added.
The flash PMI provides an early indication of the final manufacturing, services and composite PMI readings and is based on around 90 per cent of monthly survey responses. Final PMI data for manufacturing will be released on October 1 and for services on October 6.
