India's private sector growth slows in September amid softer demand
What's the story
India's private sector growth has slowed down in September, a recent survey has revealed. The HSBC Flash India Composite Purchasing Managers's Index (PMI) fell to 61.9 this month from August's high of 63.2. Despite the decline, the index still indicates strong expansion and is well above the neutral mark of 50 that separates growth from contraction.
Sectoral slowdown
Growth slowdown witnessed across all sectors
The slowdown in India's private sector growth was witnessed across all sectors, with both factory output and services growth slowing down from last month. The manufacturing PMI fell to 58.5 from 59.3 while the services business activity index fell to 61.6 from August's reading of 62.9. This indicates a general deceleration in economic activity during September compared to August's performance levels across these two key sectors of the economy.
Business dynamics
Weaker international demand also contributing to deceleration
Total new business in India's private sector grew sharply, but at a slower pace than August. Some companies reported that fierce competition was limiting order intakes. International demand also weakened, with new export orders rising at the slowest pace in six months due to a marked slowdown in the services sector. Job creation in India's private sector was moderate and slowed down from August. Only about 3% of manufacturers and 5% of service providers reported an increase in payrolls.
Economic outlook
Mixed inflationary pressures in September
Inflationary pressures in India's private sector were mixed in September. While overall input cost inflation eased, manufacturers raised selling prices at the fastest rate in nearly 13 years due to higher costs for materials like cotton and steel. However, business sentiment strengthened to a seven-month high as firms are optimistic about demand strength and potential benefits from a cut in goods and services tax (GST).