CHENNAI: India’s private sector growth slowed slightly in September, with the flash composite Purchasing Managers’ Index (PMI) slipping to 61.9 from 63.2 in August. Despite the decline, the index remains comfortably above the 50-mark that separates expansion from contraction, indicating continued strength in both manufacturing and services activity.
The latest data shows that both sectors expanded at a softer pace. The manufacturing PMI eased to around 58.5 from 59.3, while the services PMI declined to 61.6 from 62.9. New orders, including exports, continued to rise but at a slower rate, reflecting weaker overseas demand and heightened competition.
Job creation also lost momentum, with fewer firms reporting payroll increases. On the price front, input cost pressures eased slightly, but manufacturers continued to raise selling prices sharply, sustaining inflation risks. In contrast, services firms reported a modest cooling in output charges.
Business confidence, however, improved to a seven-month high, supported by expectations of stronger domestic demand during the festive season and the recent Goods and Services Tax (GST) rate cuts.
The moderation in September’s PMI follows an exceptionally strong August reading, which was among the highest in nearly two decades. The latest numbers suggest that while growth remains robust, the pace is normalising.
Several factors contributed to the easing momentum:
Exports: International demand softened, with export order growth slowing to its weakest level in six months. Recent U.S. tariff measures added to the pressure.
Domestic demand: Order inflows from within India stayed positive, helped in part by GST cuts, though the gains were less pronounced than in August.
Employment: Firms relied more on existing capacity to meet demand rather than expanding their workforce.
Prices: Manufacturing firms continued to pass higher input costs onto consumers, while pricing power in services weakened slightly.
India’s economy remains on a strong growth trajectory, but risks from weaker exports and persistent inflation pressures remain.
The Reserve Bank of India is likely to stay cautious, balancing growth momentum with inflation management.
The rupee came under pressure after the data release, reflecting concerns about external demand.
The upcoming festive season and GST rate reductions are expected to provide a domestic demand boost, potentially offsetting weaker global conditions.
Economists view that India continues to outperform many of its Asian peers on PMI indicators, even with September’s moderation. The trajectory of exports, festive-season consumption, and inflation trends will be critical in shaping the near-term outlook. Policymakers and businesses will also watch global trade developments closely, as they could weigh on India’s strong domestic momentum.