HSBC Flash PMI Shows Slowest Business Growth Since May as Rains, Weak Demand Hit Activity

In November, the HSBC Flash India Composite Output Index fell to 59.9 from 60.4 in October, according to data from S&P Global. The reading is at a six-month low, but still well above the neutral 50.0 mark, which reflects an increase in overall business activity.

This index measures the month-over-month change in the combined output of the manufacturing and services sectors. According to the report, new orders and business activity continued to expand, but at the slowest pace since May. Weak demand and heavy rains in parts of the country were key factors impeding growth.

Pranjul Bhandari, Chief India Economist at HSBC, said, "The manufacturing PMI declined, although operating conditions remain robust. Growth in new export orders remained flat in October, but overall new orders fell, indicating that GST-driven growth has peaked. Cost pressures have eased, and prices have also declined."

The HSBC Flash India Manufacturing PMI fell to 57.4 in November, down from 59.2 in October, indicating the slowest improvement in operating conditions in nine months. Manufacturers reported lower growth in production and new orders, while demand in the services sector improved only marginally.

According to the report, job creation was also impacted by slow sales growth. Employment increased for the 42nd consecutive month, but at the lowest rate in more than a year and a half. There was some relief on the price front. Input cost inflation remained at a nearly five-and-a-half-year low, while output charge inflation fell to an eight-month low.

Companies remain optimistic about the future, but overall business confidence has fallen to its lowest level since July 2022. This is due to growing concerns about weak demand conditions.