By Anant Chandak
BENGALURU (Reuters) -India’s private sector growth remained strong in September but cooled from August’s multi-year high as softer demand tempered new orders and failed to translate into faster job creation, a survey showed on Tuesday.
HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 61.9 this month from a final reading of 63.2 in August and below a Reuters poll median forecast of 62.9.
However, it was the second-sharpest rate of expansion in just over two years and was comfortably above the 50-mark separating growth from contraction.
The moderation was seen across the economy, with both factory output and services growth cooling from last month. The flash manufacturing PMI dipped to 58.5 from 59.3, while the services business activity index fell to 61.6 from 62.9.
Total new business grew sharply but at a weaker pace than August, with some firms saying intense competitive pressures were restricting order intakes.
International demand was also weaker, with new export orders rising at the softest pace in six months, dragged down by a notable slowdown in the services sector.
Job creation was moderate and slowed from August, with only around 3% of manufacturers and 5% of service providers reporting an increase in payrolls. This suggests that despite rapid growth companies are feeling little pressure to expand their workforce, a potential concern for policymakers in an economy that needs to absorb millions of new workers every year.
Inflationary pressures were mixed. While overall input cost inflation eased, manufacturers hiked selling prices at the sharpest rate in nearly 13 years, citing higher costs for materials like cotton and steel. This was offset by a cooling in charge inflation in the services sector.
Looking ahead, business sentiment strengthened to a seven-month high, with firms pinning their hopes on demand strength and a potential boost from a cut in the goods and services tax (GST).
The new tax concessions, which began on Monday, are expected to spur consumer demand heading into the festive season even as U.S. tariffs dampen the economic outlook. Exporters have said the full impact from higher tariffs will be felt this month, suggesting the latest slowdown in private sector activity could deepen.
(Reporting by Anant Chandak; Editing by Kim Coghill)
Comments