Business Activity Accelerates in September on Robust Domestic Demand: PMI
“Output and new domestic orders rose at faster rates": Pranjul Bhandari, chief India economist at HSBC
NEW DELHI: Despite weaker export momentum and subdued hiring environment, India’s business activities accelerated in September on stronger demand in both the manufacturing and services sector. The acceleration was stronger among goods producers, where sales growth hit a seven-month high and remained above that recorded by services companies, a private survey said on Wednesday.
As per the survey, the HSBC Flash India PMI composite output index showed that India’s manufacturing and service sectors posted 56.5 in September, up from a final reading of 54.3 in August. Therefore, the latest print was consistent with a sharper expansion in private sector activity and one that was the most pronounced since June.
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that 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,” Bhandari said.
The survey also showed that 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,” it said.
“However, the 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.
Meanwhile, the survey also pointed out that there was a marginal uptick in outstanding business levels at the composite level, following declines in the previous two months. “Manufacturing companies and their services counterparts signalled only mild pressure on operating capacities,” it said.
The survey also said that new export orders continued to rise across the private sector, but the rate of expansion softened from August and was the weakest in close to three years. “The moderation reflected slower growth at services firms as manufacturers saw a marginally stronger increase in new work from abroad. Panel members reported gains from Brazil, Europe, the UAE and the US in particular,” it said.
On the employment creation front, it also said that aggregate employment rose solidly in September, as companies continued to add to staffing capacity amid sustained growth of output and new orders.
“Job creation was recorded in both the manufacturing and service sectors, with rates of expansion broadly similar,” it added.
