India’s Business Growth Slows to Nine-Month Low: HSBC Flash PMI Report
Introduction
India's business activity experienced its slowest growth in nine months during September, according to the latest HSBC Flash Purchasing Managers’ Index (PMI) report, compiled by S&P Global. While output and new orders continued to rise, the pace of expansion decelerated, marking a notable shift in the trajectory of both manufacturing and services sectors.
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Slowdown in Manufacturing and Services Growth
In September, the India Services PMI Business Activity Index dropped to 58.9 from 60.9 in August, signaling a slight deceleration in the services sector. Meanwhile, the Flash India Manufacturing PMI Output Index dipped to 60 from 60.3 in the previous month, indicating a marginal slowdown in manufacturing output.The combined effect of both sectors is reflected in the India Composite PMI Output Index, which fell to 59.3 in September from 60.7 in August, underscoring the broad-based nature of the moderation.
New Orders Continue to Grow, But at a Softer Pace
The HSBC Flash PMI survey highlighted a surge in new business orders, though the rate of growth eased compared to earlier months. The rise in total new business, as well as new export orders, moderated, indicating softer demand both domestically and internationally.
Employment Growth Remains Robust Amid Optimistic Outlook
One of the more encouraging signs in the report was the continued strength in employment growth. Businesses, particularly in the services sector, responded to the steady influx of new orders by increasing hiring. The rate of job creation in the service sector was the strongest since August 2022, reflecting companies' positive outlook on future demand.
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India’s $10 Trillion Economy Ambition
India remains on track to achieve its ambitious goal of becoming a $10 trillion economy over the next decade. The government is focused on bolstering key sectors such as semiconductors, electronics manufacturing, renewable energy, and defence to fuel this growth. Increased capital expenditure on infrastructure is also expected to create jobs and stimulate the manufacturing sector.
Conclusion: Growth Slows, but Optimism Prevails
While India’s business activity grew at the slowest pace in nine months, the overall outlook remains positive. Strong employment growth, robust business confidence, and relatively contained inflationary pressures provide reasons for optimism. The deceleration in growth does raise questions about the sustainability of India’s expansion as the global economic environment remains uncertain, but businesses remain hopeful about securing new orders and achieving future growth.
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