India's flash PMI declines to 61.9 in September; mfg records higher growth

Flash PMI September 2025: Pricing pressures were more pronounced in the service sector in September, although they moderated compared with previous months, while manufacturing saw a pick-up

The HSBC Flash India Composite Output Index, which measures the combined performance of India’s manufacturing and service sectors, fell to 61.9 in September from 63.2 in August, marking a modest slowdown but still indicating a sharp rate of expansion. This was the second-best reading in over two years. Growth in factory output outpaced that of services, although the pace of increase moderated across both sectors.

 

Chief India Economist at HSBC Pranjul Bhandari said: "The manufacturing PMI moderated, but its pace of expansion remains healthy. The imposition of the 50 per cent tariff rate by the US on India likely resulted in a slower rise in new export orders over August-September. This comes on the back of strong frontloading of exports to the US since early 2025.”

 

According to Bhandari, the impact of higher tariffs has been offset by lower tax rates in the data so far. “New domestic orders rose for the last two months, likely on the back of announcements of lower goods and services tax (GST) rates,” he said.

Manufacturing, services PMI slips

The HSBC Flash India Manufacturing PMI slipped to 58.5 in September from August’s final 59.3, while the HSBC Flash India Services PMI fell to 61.6 in September from 62.9 in August 2025. Similarly, the Manufacturing Output Index decreased to 62.7 from 63.7. Despite these dips, all indices remained well above the neutral 50.0 mark, signalling robust expansion. While a number above 50 shows expansion, a number below 50 shows contraction.

Business activity remains strong

September PMI data showed a continued increase in new business for Indian private sector companies. Several companies reported that demand conditions were favourable, though some noted that competitive pressures limited order intake. 

 

As for exports, the services saw the growth slow to the joint-weakest pace since March 2025, whereas manufacturing firms recorded a faster upturn. Hence, the new export orders rose at the slowest rate in six months.

Employment trends in September

Private sector employment continued to expand at the end of the second quarter, but the pace moderated from August. Both manufacturing and service sectors recorded slower increases in employment, with approximately 3 per cent of manufacturers and 5 per cent of service providers reporting job creation. According to the S&P Global report, most of the firms indicated that they had sufficient labour for current requirements.

Services ease, manufacturing costs rise

Pricing pressures persisted in the service sector in September, although they moderated compared with previous months, while manufacturing saw a pick-up. Companies reported higher input costs for items such as cotton, electronic components, oil, steel, vegetables, and wood, along with increased wage bills. Overall, however, private sector expenses rose at a softer pace in September.

 

Meanwhile, manufacturers raised selling prices more sharply than service providers, with factory gate charges climbing at the fastest rate in over 12.5 years. The moderation in the service economy helped keep the overall private sector inflation rate in check.

Business outlook ahead

According to the report, private sector firms expressed strong optimism for future output, with confidence reaching a seven-month high. Factors driving this optimism included capacity expansion, competitive pricing, strong demand, efficiency improvements, and marketing initiatives. Some firms also expected to benefit from the GST rate cuts. 

Flash PMI data September 2025