India's Services PMI slipped to 60.9 in September, down from 62.9 in August. Growth slowed, particularly due to subdued international demand. The Manufacturing PMI also registered slower growth at 57.7. Overall, the Composite PMI stood at 61.0, indicating the weakest expansion since June.
Services PMI: India's service sector activity expanded for the 26th consecutive month in September, but the pace of growth slowed. According to the HSBC India survey, the Services PMI dropped to 60.9, while the Manufacturing PMI was 57.7. The primary reasons for this slowdown are a decline in global demand and a competitive environment. Growth in output and new orders slowed across both sectors, leading the Composite PMI to fall from 63.2 in August to 61.0.
Slower Growth in Service Sector
Pranjul Bhandari, Chief India Economist at HSBC, stated that service sector activities in September saw a slight deceleration compared to August's elevated levels. While most trackers indicated a marginal dip, there were no signs of a significant downturn. The Future Activity Index reached its highest level since March, reflecting positive business prospects for service companies.
Growth in new orders also slowed compared to August. The main reason cited was a decrease in international demand for Indian services. Exports increased, but at their slowest rate since March. Companies reported that growth was constrained by a competitive environment and cost control measures.
Slowdown in New Jobs and Price Increases
The report also stated that the growth in the number of new jobs slowed. Less than five percent of companies reported an increase in hiring. Furthermore, prices charged for services increased at a slower pace. This was the slowest growth since March.
Companies observed an increase in labor and material costs towards the end of the second quarter. Overall, inflation remained stable, but was lower than the previous month and below the long-term average.
Improvement in Trade Sentiment
Although growth was slightly slower, trade sentiment improved in September, reaching a six-month high. Companies cited factors such as advertising, skill development, competitive pricing, and tax reductions as positive drivers. As a result, prospects for future growth remain b.
Slower Growth in Manufacturing Sector Too
The Manufacturing PMI stood at 57.7 in September, down from 59.3 in August. This indicates the weakest growth for the sector since May, but being above the neutral 50-mark still signals expansion. Output growth in the manufacturing sector slowed, and new orders also showed moderation.
Dip in Composite PMI
Due to slower growth in both the manufacturing and service sectors, the HSBC India Composite PMI Output Index declined to 61.0 in September from 63.2 in August. This represents the weakest rate of expansion since June. The report indicated that total sales increased at their slowest pace in the past three months.
Impact of International Demand
According to experts, the subdued international demand has impacted the growth of both India's service and manufacturing sectors. Exports increased, but did not show the expected vigor. Furthermore, global economic uncertainties and fluctuations in raw material prices are also limiting the pace of growth.
