 "India's flash PMI falls to six-month low at 59.9 in Nov from 60.4 in Oct")
The HSBC Flash India Composite Output Index, which measures the combined performance of India’s manufacturing and services sectors, fell to 59.9 in November from 60.4 in October, marking a six-month low, according to data released by S&P Global on Friday.
This seasonally adjusted index, which tracks month-on-month changes in the combined output of the two sectors, indicated a slower rate of expansion. The growth slowed in November mainly because factory production grew more slowly, the weakest since May. Some manufacturers got fewer new orders, while service sector activity grew faster than in the previous month.
However, the overall growth remained strong, with the index staying well above the neutral mark. A reading above 50 indicates economic expansion, while one below 50 shows contraction in the manufacturing, services, or construction sectors. A reading of exactly 50 signifies no change.
Chief India Economist at HSBC Pranjul Bhandari said, "The HSBC flash manufacturing PMI eased, though the improvement in operating conditions remained healthy. The rise in new export orders matched that seen in October. However, overall new orders came in soft, indicating that the GST-led boost may have peaked. Cost pressures eased considerably, and so did prices charged."
New orders remain muted
According to the data, the manufacturing PMI dropped from 59.2 in October to 57.4 in November. New orders for factories increased at a weaker pace, while demand for services improved. Overall sales growth was still strong but the slowest in six months, partly due to difficulties getting new business and heavy rains in some areas.
Exports steady, services slow down
Export orders for goods stayed steady, but services saw a slight slowdown. International demand rose, but at the weakest rate since March due to tough global competition and cheaper alternatives abroad.
Job growth slowest in 18 months
Companies did not face pressure on capacity, with pending work falling slightly. Job growth continued but was the slowest in over 18 months as weaker demand and lower workloads reduced hiring. The report noted that a combination of slower sales growth and falling backlogs reportedly stymied job creation across India's private sector midway through the third financial quarter.
Input costs rise, inflation remains mild
Input costs and selling prices rose again, but inflation was mild and the weakest in over five years. Businesses still expect output to grow in the coming year, supported by pricing and expansion efforts, but overall confidence was the lowest since mid-2022.
Forward outlook
The private sector firms in India forecast output growth in the year ahead, supported by competitive pricing strategies, marketing initiatives and capacity expansion efforts in recent months. However, the overall level of confidence fell to its lowest since mid-2022 during November.