India's Pvt. Sector Growth Recovers Slightly From 4-yr Low
As per the survey, Indian companies also reported a slightly stronger increase in new order volumes during August, although the pace of growth was subdued compared with the trend observed over recent years
New Delhi: India's private sector activity slightly inched up in August from an over four-year low as a rebound in the services growth offset the weakest expansion in the factory industry in half a decade. While growth in new order volumes improved in August, the pace, however, remained low compared with the trend in recent years,a private survey said on Friday.
As per the HSBC’s flash purchasing managers’ index (PMI), the index rose to 54.6 from a final reading of 54.3 in July, which was the lowest since early 2022. The index also remained above the 50 mark, which separates expansion from contraction, for the 61st consecutive month.
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that overall private sector output growth was broadly steady, helped by stronger services activity. Manufacturing growth weakened further in August, marking the softest improvement in five years,” Bhandari said.
As per the survey, Indian companies also reported a slightly stronger increase in new order volumes during August, although the pace of growth was subdued compared with the trend observed over recent years. “Output and new orders still rose, but at a slower pace. Stock of finished goods remained high even though input buying slowed. Cost pressures eased, but firms raised selling prices faster, pointing to stronger pass-through,” Bhandari added.
The survey also pointed out that anecdotal evidence indicated that challenging market conditions, competitive pressures and lower customer requirements often stymied growth. “The improved rate of expansion in August was centred on the service sector which, after recording the softest upturn in business activity and new work for 53 months in July, staged a modest re-acceleration as growth rates strengthened,” it noted.
By contrast, the survey also said, the manufacturing sector lost momentum in August, posting the weakest rises in production and new orders in exactly five years. “Export orders increased solidly across the Indian private sector midway through the second fiscal quarter, albeit with the rate of expansion easing across both manufacturing and services. Companies pointed to stronger orders from a diverse range of export markets including the US, Germany, China, Singapore and Japan,” the survey said.