India flash PMI rises to 56.5 in September as manufacturing strengthens | Economy & Policy News

India’s private sector activity strengthened in September, led by a sharper improvement in manufacturing, according to the HSBC Flash India Purchasing Managers’ Index (PMI) released on Wednesday.

 

The HSBC Flash India Composite Output Index rose to 56.5 in September from a final reading of 54.3 in August, signalling the strongest expansion in private sector activity since June. Output growth accelerated across both manufacturing and services, while aggregate new orders also increased at a quicker pace.

 

The HSBC Flash India Manufacturing PMI rose to 55.7 in September from 52.8 in August, marking the strongest improvement in manufacturing operating conditions in seven months. The Manufacturing PMI Output Index climbed to 58.2 from 54.8, while the Services PMI Business Activity Index increased to 55.8 from 54.1.

  

New business expanded at a faster pace during the month, with demand strengthening in both manufacturing and services. The acceleration was stronger among goods producers, where sales growth hit a seven-month high and remained above that recorded by services companies.

 

Service providers attributed stronger order intake to marketing efforts and reported increased demand for properties, transport services and travel bookings, alongside growing client interest in software and digital solutions. Manufacturers reported stronger demand for aluminium products, electronic items, food, pharmaceutical goods and new models.

 

However, growth in new export orders moderated. While overseas orders continued to rise across the private sector, the pace of expansion was the weakest in close to three years, reflecting slower growth among services companies. Manufacturers recorded a marginally stronger increase in new export business.

 

Employment rose solidly in September as companies continued to add staff amid sustained growth in output and new orders. Job creation was recorded across both manufacturing and services at broadly similar rates.

 

Inflationary pressures, meanwhile, eased at the broader private-sector level. Input cost inflation slowed to its lowest level since January as softer cost pressures in services more than offset a pick-up among manufacturers. Selling price inflation was broadly unchanged overall, although factory-gate price increases accelerated while services firms raised charges at a slower pace.

 

Business confidence also improved, with optimism about output over the coming year rising to a four-month high across the private sector.

 

Manufacturers increased their purchasing activity during the month, while input stocks rose at the fastest pace since February. Growth in finished goods inventories climbed to an 11-and-a-half-year high.

 

“Activity in the private sector gained momentum, led by stronger manufacturing. Output and new domestic orders rose at faster rates,” said Pranjul Bhandari, chief India economist at HSBC. She added that renewed tensions in the Middle East had prompted firms to build buffers to manage uncertainties, while price pressures strengthened among manufacturers.