Indian Businesses Experience Slowest Growth in Nine Months, According to HSBC Flash PMI
Overview of Business Activity in September
India’s business activity decelerated in September, with output and new orders hitting a nine-month low, as per the flash survey by HSBC Holdings Plc. Despite this moderation, employment displayed robust growth, reflecting improved business confidence.
Key Findings from the Survey:
- Solid Employment Growth: Employment increased at a steady pace.
- Continued Strong Growth: Overall responses from 400 manufacturers and 400 service providers suggest sustained growth.
Insights from the HSBC Flash PMI Survey
The HSBC flash PMI survey, compiled by S&P Global, presents a comprehensive picture of the business environment.
Highlights:
- Robust New Business Inflows
- Solid Job Creation
- Optimistic Growth Expectations
- Muted Inflation: Both input cost and output price inflation remained subdued, with service providers raising their charges at the slowest rate in over two and a half years.
Sectoral Performance Indicators
Services Sector
- PMI Business Activity Index: Registered at 58.9 in September, down from 60.9 in August. This slight dip indicates a slowdown in service sector activities.
Manufacturing Sector
- Flash India Manufacturing PMI Output Index: Dipped to 60 in September from 60.3 in the prior month.
- HSBC Flash India Manufacturing PMI: Stood at 56.7 in September, down from 57.5 in August. This reading reveals a softening in business conditions for manufacturers, compared to January’s figures.
Composite PMI Output Index
- Manufacturing and Services Combined: The Composite PMI Output Index decreased to 59.3 in September from 60.7 in August.
Surge in New Orders
The survey reports a marked expansion in total business activity, driven by new orders. However, the growth rate, while still high, slowed slightly to the softest level year-to-date.
Sectoral Trends:
- Moderated Growth: Both total new business and new export orders grew but at a reduced pace.
Economist Insights:
- Pranjul Bhandari, Chief India Economist at HSBC:
- Observations: “The flash composite PMI indicated slightly slower growth in September, the lowest in 2024. Both manufacturing and service sectors showed similar trends, yet the growth rate remains above the long-term average.”
- Employment Trends: “Despite moderated new order growth, hiring levels rose, supported by improving business confidence. Notably, the service sector saw the steepest rise in employment since August 2022, driven by strong new orders.”
- Price Trends: “Input cost inflation rose slightly in September. Output charge rates slowed in both sectors, particularly manufacturers, suggesting reduced margins.”
India’s Ambition for a $10-Trillion Economy
India is set on achieving a $10 trillion economy over the next decade, leveraging an expanding manufacturing sector as a primary growth driver.
Key Focus Areas:
- Semiconductors
- Electronics Manufacturing
- Electric Vehicle Ecosystem
- Renewable Energy
- Defence
The central government is amplifying capital expenditure to:
- Enhance Infrastructure
- Create Jobs
- Stimulate Manufacturing Growth
Positive Business Outlook
Despite the slower growth in output and new orders in September, Indian businesses remain confident about future expansion.
Survey Insights:
- Optimistic Outlook: Firms expect business activity to increase over the coming year.
- Rising Confidence: Confidence levels strengthened from August and were above the average recorded since 2012.
Concluding Insights and Recommendations
Strategic Recommendations for Businesses
Given the insights from the HSBC Flash PMI survey, businesses must adopt a proactive approach to navigate the current economic landscape efficiently. Here are some strategic recommendations to consider:
- Focus on Consistent Improvement:
- Enhance Operational Efficiency: Continuously seek ways to improve operational processes to maintain productivity despite fluctuating market conditions.
- Leverage Technology: Embrace digital transformation and automation to streamline operations and reduce costs.
- Optimize Workforce Management:
- Employee Training and Development: Invest in skill enhancement programs to upskill employees, ensuring they are equipped to handle evolving business challenges.
- Flexible Workforce Strategies: Adopt flexible workforce strategies, such as remote working options, to maintain productivity and employee satisfaction.
- Strengthen Financial Resilience:
- Prudent Financial Planning: Implement robust financial planning and management strategies to withstand market volatility.
- Diversify Revenue Streams: Explore new markets and diversify product offerings to mitigate risks associated with dependence on a single revenue stream.
- Innovate and Adapt:
- Product Innovation: Continuously innovate and adapt product lines to meet changing consumer demands and preferences.
- Business Model Adaptation: Be prepared to pivot the business model in response to market challenges and opportunities.
Leveraging Estabizz’s Expertise
At Estabizz Fintech Private Limited, we are committed to empowering businesses to navigate both local and international markets with confidence. Our comprehensive suite of services provides the strategic insights and tools necessary to achieve growth and compliance.
Our Core Services Include:
- Global Financial Compliance: Ensuring your business meets regulatory requirements across various jurisdictions.
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Our Global Reach:
- Local Expertise in Numerous Countries: Our team comprises experts with extensive knowledge of local markets, allowing us to provide precise and actionable insights.
- Strategic Partnerships: We have established partnerships with key stakeholders worldwide to support your business’s expansion and growth.
Final Takeaways
As businesses face a dynamically changing global economy, it is crucial to remain agile and strategic. The HSBC Flash PMI insights underscore the importance of:
- Adapting to evolving market conditions.
- Focusing on operational efficiency and workforce management.
- Strengthening financial resilience and fostering innovation.
Key Takeaways
- Business Activity: Slows down yet remains robust.
- Employment: Grows at a strong pace, especially in the service sector.
- New Orders: Increase, yet at a slower rate.
- Price Inflation: Muted, with a sharper slowdown in manufacturing.
- Future Outlook: Businesses are optimistic and confident in securing new orders and achieving output growth.
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
