Private business activity rebounds to 3-month high in Sep, PMI shows

India's private sector activity rose to a three-month high in September as manufacturing and services output improved, while new orders and hiring also gained momentum

India’s private sector business activity rose to a three-month high in September as output improved across manufacturing and services, according to a private survey released on Wednesday.

 

The HSBC Flash India Manufacturing Purchasing Managers’ Index (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.

 

The composite index was at 56.5, compared with 54.3 in August. It remained above the 50 mark separating expansion from contraction for the 62nd consecutive month.

 

Private firms recorded a faster growth in new business in September as demand improved across both sectors, the survey said. Sales growth remained above that recorded by services companies and hit a seven-month high.

 

 

Service providers’ marketing boosted order intakes, 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.

 

“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.

 

Growth in output and new orders led firms to increase hiring in September. “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 mark 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.”

 

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 is an early indication of the final manufacturing, services and composite PMI readings and is based on around 90 per cent of monthly survey responses. The final PMI data for manufacturing will be released on October 1 and for services on October 6.