India's Composite PMI Growth Slows In September, Marking Slowest Growth In 2024

India's combined output in the manufacturing and services sectors experienced a decline in September, with the HSBC Flash India Composite PMI Output Index falling to 59.3, down from 60.7 in August, according to the survey released on Monday.

PMI Growth Slows

The survey also revealed a drop in the HSBC Flash India Manufacturing PMI, which slipped to 56.7 from 57.5 in August. It is a single-figure measure that assesses factory business conditions, factoring in new orders, output, employment, supplier delivery times, and inventory levels.

The survey noted that while output and new orders continued to rise, the pace was the slowest seen since early 2024. However, growth remained strong across India's private sector. Employment also showed solid gains, buoyed by improved business confidence.

"The latest HSBC 'flash' PMI(r) survey, compiled by S&P Global, signalled ongoing strong growth across the Indian private sector during September, although both output and new orders rose at the slowest rates in 2024 so far" said the survey.

It added that inflation rates for both input costs and output prices were relatively muted, with service providers raising their charges at the slowest pace in over two and a half years.

"Softer expansions were seen across both the manufacturing and services sectors.... The reading signalled a further marked strengthening in business conditions for goods producers, but the rate of improvement was the softest since January" the survey said.

The respondents in the survey indicated that overall business activity was supported by rising new orders, but the pace of growth eased, marking the slowest rate so far in 2024. This was true for both total new business and new export orders.

"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. Nevertheless, the pace of growth remained well above the long-term average.

Growth in new orders moderated by a touch in September, but hiring levels rose at a faster pace, supported by improving business confidence" said Pranjul Bhandari, Chief India Economist at HSBC.

Input Cost Inflation Remains Low

As per the survey, the companies were able to manage workloads effectively in September, as indicated by only a slight rise in backlogs, the slowest in just over two and a half years.

In manufacturing, the survey highlighted that the job growth slowed, but Indian manufacturers continued to expand their purchasing activities in September. Input cost inflation in the private sector remained relatively modest, though slightly higher than in August, with manufacturers and service providers citing increased prices for raw materials and electricity.

Output price inflation also stayed muted, with the latest rise in charges being modest and the lowest since February. In the manufacturing sector, inflation remained solid but eased further from July's recent peak. Service providers increased their charges at the slowest pace since February 2022.

Despite the softer expansions in output and new orders, companies across India remained optimistic about business growth over the coming year.