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India private sector activity gains pace in Sept
India’s private sector activity reported a strong gain in momentum in September, as seen in the Flash Purchasing Managers’ Index (PMI) data released by S &P Global on Wednesday
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India’s private sector activity reported a strong gain in momentum in September, as seen in the Flash Purchasing Managers’ Index (PMI) data released by S &P Global on Wednesday. The headline indicator, the HSBC Flash India Composite PMI Output Index increased from 54.3 in August to 56.5 in September. To be sure, manufacturing reported stronger gains than services in the data.
“Activity in the private sector gained momentum, led by stronger manufacturing. Output and new domestic orders rose at faster rates,” said Pranjul Bhandari, Chief India Economist at HSBC.
All four indicators in the Flash PMI data show a strong improvement between August and September. Flash India Services PMI Business Activity Index increased from 54.1 in August to 55.8 in September. Flash India Manufacturing PMI Output and Flash India Manufacturing PMI also increased from 54.8 to 58.2 and 52.8 to 55.7 respectively.
A PMI value above 50 indicates expansion in economic activity over the last month. While PMI Manufacturing output measures just factory production, PMI Manufacturing is a weighted average of five indicators, looking at overall factory conditions including new orders, output, employment, suppliers’ delivery time and stock of purchases.
Flash data are calculated from around 80-90% of total survey responses and are intended to provide an early indication of the final readings. Both the manufacturing PMI and services PMI returned above their long-run average in September.
Firms recorded a faster pace of increase in total new businesses and demand strengthened in both manufacturing and services. Demand was stronger in manufacturing and sales growth reached a seven-month high.
Participating service firms attributed the increased order intakes to marketing efforts. Firms mentioned stronger demand for properties, transport services, and new travel bookings along with growing client interest in software and digital solutions. On the other hand, manufacturers reported strengthening demand for aluminium products, electronic items, food, pharmaceutical goods and new models in general.
New export orders rose in September, but the rate of expansion observed was the weakest in close to three years.
With the growth in output and new orders, firms increased staffing capacity leading to an increase in aggregate employment. Both sectors saw an increase in job creation with rates of expansion broadly similar.
Both sectors reported only mild pressures on operating capacities.
Overall input cost inflation eased in September to its lowest mark since January thanks to softer cost pressures in services which helped offset the increase in prices amongst manufacturers. Firms that experienced an increase in overall cost burden attributed it to increased spending on electrical components, foodstuff, fuel, metals, pharmaceutical ingredients and technology resources.
“Renewed tensions in the Middle East have once again led firms to build buffers to manage the uncertainties. 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,” she added.
Final figures for manufacturing PMI and services PMI will be released on October 1st and 6th respectively.
