India’s private sector activity grew at its slowest pace in six months in November as manufacturing output weakened sharply, even as services activity picked up, Reuters reported citing HSBC’s flash India Composite Purchasing Managers’ Index (PMI) released on Friday.
Compiled by S&P Global, the composite PMI, slipped to 59.9 in November from 60.4 in October, slightly below the Reuters poll estimate of 60.1.
The index remains well above the 50-point mark that separates expansion from contraction, but the third straight monthly decline signals that momentum in Asia’s third-largest economy is moderating.
Manufacturing reported the steepest slowdown. The flash India Manufacturing PMI fell to a nine-month low of 57.4 from 59.2 in October, with survey respondents citing weaker factory production and softer new business inflows. Companies said part of the slowdown stemmed from “heavy rain” in several regions and difficulties in winning orders amid competitive global pricing.
“Overall new orders came in soft, indicating that the GST (goods and services tax)-led boost may have peaked,” Reuters quoted Pranjul Bhandari, chief India economist at HSBC, as saying.
Services activity offered some support, rising to 59.5 from October’s 58.9. However, the survey showed new export orders across both sectors rising at the slowest pace since March, reflecting the drag from the US decision to impose 50 per cent tariffs on certain imports from India.
India’s merchandise trade deficit hit a record high in October as exports to the US fell nearly 9 per cent year-on-year. In response, the government has announced over $5 billion in measures, including credit guarantees and bank loans, to cushion exporters from the tariff impact.
Sentiment weakened further as optimism for output over the next 12 months fell to its lowest level since July 2022. The softer outlook weighed on hiring, with job creation easing to its slowest pace in more than 18 months.
Inflation pressures continued to cool in November. Input cost increases were the weakest in over five years, while output charge inflation fell to an eight-month low, pointing to broader easing in price pressures. With consumer inflation dropping to a record low of 0.25 per cent last month, expectations have strengthened that the Reserve Bank of India may cut the repo rate by 25 basis points at its next policy meeting.
(With inputs from Reuters)
