New Delhi: India’s private sector activity showed signs of cooling in October, as the latest flash India Composite Purchasing Managers’ Index (PMI) released by S&P Global for HSBC dropped to 59.9 from September’s 61.0. While the figure still indicates expansion above the neutral 50-point mark, it represents the slowest pace of growth in five months and fell short of analysts’ expectations of 61.2, signaling that the momentum of India’s economic recovery may be moderating.
The slowdown was particularly evident in the services sector. The services business activity index declined sharply to 58.8 from 60.9, reflecting weaker client demand and rising operational costs. Firms across hospitality, retail, and IT services reported that incoming work orders were growing at a slower pace, while pressures from inflation and wage costs contributed to cautious business activity. The softer performance in services weighed heavily on the overall PMI, highlighting vulnerabilities in India’s domestic consumption-driven growth.
In contrast, the manufacturing sector demonstrated relative resilience. The manufacturing PMI edged up slightly to 58.4 from 57.7, showing a modest recovery from recent lows. Companies reported steady production levels supported by ongoing domestic orders, though export demand remained subdued. Manufacturers also cited logistical challenges and rising input costs, but overall production and employment indicators remained in positive territory, sustaining a moderate expansion.
The dynamics of demand presented a mixed picture. The new orders sub-index expanded at its slowest rate since May, with services driving the deceleration. Export orders softened significantly, reaching their weakest level in seven months. Analysts attributed this trend to global economic uncertainties, rising trade barriers, and geopolitical tensions, including scrutiny over India’s energy imports. Domestic demand, while still growing, reflected caution among consumers and businesses alike, suggesting a more tempered outlook in the near term.
Cost pressures and pricing strategies revealed nuanced developments. Input costs eased slightly, helped by reductions in the Goods and Services Tax (GST), yet firms continued to pass on some expenses to clients through higher selling prices. The trend indicated that while inflationary pressures were moderating, businesses were still mindful of maintaining profitability amid operational challenges.
Looking ahead, business sentiment has softened. Companies expressed concerns over competitive pressures, potential slowdowns in international markets, and uncertainties in domestic demand. Although the private sector remains in expansion territory, these factors may limit the pace of growth and prompt firms to adopt more cautious investment and hiring strategies in the coming months.
Overall, October’s PMI reading underscores that India’s private sector continues to grow but at a slower, more measured pace. The deceleration in services, combined with cautious export performance and lingering cost pressures, highlights the challenges facing policymakers and businesses as the country navigates a complex economic landscape.