India’s business activity growth slowed to a nine-month low in September, reflecting a slight cooling in demand and rising costs, according to a survey. The HSBC flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 59.3 from August’s 60.7, though it remained above the crucial 50-mark that indicates expansion, continuing a growth streak that has lasted over three years.
Both the manufacturing and services sectors exhibited similar trends this month, with growth rates well above the long-term averages. The services sector’s index decreased to 58.9 from 60.9, marking its lowest level since November, while the manufacturing index dropped to 56.7 from 57.5, the lowest in eight months.
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Overall growth was impacted by a softer rise in new business and orders, affecting demand in both domestic and international markets. Manufacturing output expansion remained largely unchanged from August, but companies noted a decline in the ability to pass on rising input costs, leading to muted price increases.
Input cost inflation increased at a slightly faster rate, while output charge growth slowed across both sectors. This situation is likely to keep the Reserve Bank of India cautious, particularly with inflation remaining below its medium-term target of 4.0% for the second consecutive month.
Despite these challenges, firms continued hiring, buoyed by optimistic business outlooks for the next year. The rise in employment in the services sector was the fastest since August 2022, while manufacturing jobs increased for the seventh month in a row, albeit at a slightly reduced pace compared to August.
