MUMBAI: The services activity slowed to the lowest in nine months with the purchasing managers’ index printing at 58.9 in September, down from 60.9 in August.
The number is still in the positive territory as it is above 50. Any reading below 50 indicates there is trouble brewing.
The flash manufacturing output index also dipped to 60 in September, from 60.3 in the previous month, showing a slowdown in manufacturing.
According to the HSBC flash services business activity index fell to a nine month low of 58.9 in September, down from 60.9 in August and the agency said Monday and attributed the business activity moderation to the lower output and new orders.
However, employment continued to increase at a solid pace amid improved business confidence. The survey indicates that growth remained strong, as responses from 400 manufacturers and 400 service providers indicate.
PMI survey also highlights strong new business inflows, solid job creation, and optimistic growth expectations.
Rates of input cost and output price inflation were relatively muted, with service providers raising their charges at the slowest pace in just over two and a half years, the agency said.
The flash manufacturing output index also dipped to 60 in September, from 60.3 in the previous month, showing a slowdown in manufacturing.
On the other hand the composite output index, combining manufacturing and services, increased to 59.3 in September from 60.7 in the previous month.
Meanwhile, the flash manufacturing PMI stood at 56.7 in September, down from 57.5 in August.
"The reading signals a further marked strengthening in business conditions for goods producers, but the rate of improvement was the softest since January," the survey said.
According to the survey, the expansion in total business activity showed that new orders continued to rise sharply. However, the pace of growth eased and was the softest in the year-to-date. This was the case with both total new business and new export orders.
"The flash composite PMI rose at a slightly slower pace in September, marking the slowest growth observed in 2024. Both the manufacturing and service sectors exhibited similar trends during the month. Nevertheless, the pace of growth remained well above the long-term average," according to Pranjul Bhandari, the chief India economist at HSBC.
"Growth in new orders moderated, but hiring levels rose at a faster pace, supported by improving business confidence. In fact, the rise in employment in the service sector was the steepest since August 2022, as companies responded to robust growth in new orders," she said.
On the price front, input cost inflation rose at a slightly quicker pace in September. Rates of increase in output charges slowed in both sectors, with manufacturers experiencing a larger slowdown, implying a bigger reduction in their margins, she said.
She added that despite the softer expansions in both output and new orders in September, domestic companies remained strongly optimistic that business activity will increase over the coming year.
"Moreover, confidence strengthened from August and was above the average since the series began in 2012. Firms generally expect to be able to secure new business over the next 12 months, thereby supporting output growth," she said.