Strong PMI Signals The HSBC Flash India Composite Purchasing Managers’ Index (PMI) recorded a reading of **56.5** in September, up from **54.3** in August. A value above 50 indicates expansion, and this level marks the strongest growth in private‑sector activity since June. The index reflects the combined performance of manufacturing and services, both of which contributed to the uptick.
Manufacturing Rebounds Manufacturing activity accelerated, with the flash Manufacturing PMI climbing to **55.7** in September from **52.8** in August. This is the highest reading in seven months. Goods producers reported a seven‑month high in sales growth, driven by heightened demand for aluminium, electronics, food, pharmaceuticals and new product models. The sector’s faster price increases were offset by a modest rise in input costs.
Services Demand Services firms also posted gains, citing stronger demand for property and transport services, new travel bookings, and software and digital solutions. While the services PMI was lower than manufacturing’s, it still reflected solid expansion. Cost pressures in services eased, with firms reporting lower inflation on electrical components, food, fuel, metals, pharmaceutical ingredients and technology resources.
Export Slowdown Domestic improvement contrasted with a sharp moderation in export demand. New export orders continued to rise in September, but the pace of expansion slowed from August to its weakest in nearly three years. The slowdown was largely driven by services companies, which saw a decline in overseas orders. This divergence highlights the resilience of domestic demand amid a cooling global market.
Cost and Employment Overall input‑cost inflation fell to its lowest level since January, easing pressure on the private sector. Manufacturers raised factory‑gate prices at a faster pace, while service providers moderated their price increases. Employment grew as firms added workers to meet higher output and new orders, signalling confidence in the near‑term outlook.
Looking Ahead HSBC’s chief India economist, Pranjul Bhandari, noted that output and domestic orders had accelerated, but renewed tensions in the Middle East prompted companies to build inventories as a buffer against uncertainty. Business sentiment also strengthened, with optimism about output over the coming year rising across both manufacturing and services.
The coming months will test whether the manufacturing rebound sustains and whether export demand can recover as global conditions evolve. Investors and policymakers will watch the next PMI release for clues on whether the current expansionary momentum continues.