India’s September business growth at nine-month low as demand eases, PMI shows

Growth in India’s business activity slowed to a nine-month low in September amid a slight cooling in demand and an uptick in costs, according to a survey that also showed services sector jobs rose at the fastest pace in two years.
HSBC’s flash India Composite Purchasing Managers’ Index , compiled by S&P Global, slipped to 59.3 this month from August’s final reading of 60.7.
However, overall activity remained strong, taking the expansionary streak – the 50-mark separating expansion from contraction – to over three years.
“The flash composite PMI in India rose at a slightly slower pace in September, marking the slowest growth observed in 2024,” noted Pranjul Bhandari, chief India economist at HSBC.
“Both the manufacturing and service sectors exhibited similar trends during the month. Nevertheless, the pace of growth remained well above the long-term average.”
The dominant services industry’s index fell to 58.9 this month from 60.9 in August, its lowest since November, while the manufacturing one cooled to an eight-month low of 56.7 from 57.5.
Overall growth was hurt by a softer rise in new business and orders – key gauges for demand – for both services and goods providers in domestic as well as overseas markets. The pace of expansion in manufacturing output was largely unchanged from August.
Highlighting softer demand, companies refrained from fully passing on a slight acceleration in input costs to customers as prices charged were muted compared to last month. Firms noted higher raw materials and electricity prices.
“Input cost inflation rose at a slightly quicker pace in September. Rates of increase in output charges slowed in both sectors, with manufacturers experiencing a larger slowdown, implying a bigger reduction in their margins,” added Bhandari.
That is likely to keep the Reserve Bank of India on edge as uncertainty over the inflation outlook has increased despite registering below its medium-term target of 4.0% for a second month in August. The next policy meeting will be Oct. 7-9.
However, firms continued to hire additional staff this month as the business outlook for the coming 12 months was upbeat, driven by expectations of securing new business.
The rise in employment in the services sector was the sharpest since August 2022 and manufacturing jobs increased for a seventh consecutive month, albeit at a slightly easier pace than in August.