MUMBAI: New business gains and higher exports helped the private sector to perform better in November leading to the composite purchasing managers index rise in the month to 59.5, a flash survey has shown amidst rising inflation pressures.
The month saw accelerated job creation and services sector growth, yet inflation surged to a near 14-month high in October at 6.21 per cent. Services sector hiring is the highest since 2005.
“The flash composite output index rose from a final reading of 59.1 in October to 59.5 in November, indicating a sharp expansion that was the strongest in three months and above its long-run average,” HSBC India said Friday.
The index combines performance in the manufacturing and services sector and is based on the survey conducted among 400 manufacturing and 400 service providers.
The seasonally adjusted index measures the month-on-month change in the combined output of the manufacturing and services sectors.
“Growth ticked lower in the manufacturing industry while picking up in services, although the former has outperformed again,” the survey said.
While flash services PMI rose to 59.2 in November as against 58.5 in October, manufacturing PMI was 57.3 as against 57.5.
“Strong end-demand and improving business conditions pushed services sector employment to the highest level ever recorded by this indicator since December 2005. Meanwhile, price pressures are rising for raw materials used by manufacturers, as well as food and wage costs in the services space,” Pranjul Bhandari, chief economist at HSBC India, said.
The services sector has a share of over 50 per cent in GVA, while manufacturing has a share of over 15 per cent.
The ongoing improvements in new business intakes continued to exert pressure on the capacity of private sector companies, as signalled by another uptick in the backlogs.
While expansion in outstanding business volumes was moderate, nevertheless the quickest since May.
In turn, companies hired more people in November, as a result, the rate of job creation accelerated to the steepest since composite data became available in December 2005, driven by rising workforce numbers across the service economy, she said.
Meanwhile, cost pressures intensified in November, reaching their highest since August 2023. Manufacturers commented on price hikes for a range of raw materials, including aluminium, cotton, leather and rubber. Service providers particularly remarked on greater food costs and wage bills.
“In response to rising operating costs, companies hiked prices again in November,” the survey said, adding the rate of inflation was sharp and the fastest in just under 14 months.