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India: Growth in manufacturing moderates while growth in services improves

September 3, 2014

The manufacturing Purchasing Managers’ Index (PMI) elaborated by HSBC fell from 52.4 in August to 51.0 in September. Despite the fall, the indicator remains above the 50-threshold that indicates expansion in business conditions in the manufacturing sector.

HSBC noted that September’s reading continues to show that Indian manufacturing activity, “continues to slow amid weaker output and new orders flows. Responding to the slowdown, firms lowered purchases and trimmed inventories. On the positive side, the rate of cost inflation decelerated sharply and output prices were unchanged.”

Meanwhile, the services PMI increased in September, from 50.6 to 51.6. The print represented the first improvement since June and continues to sit above the 50-threshold, which indicates growth in services. HSBC stated that stronger demand led to an increase in new businesses. In addition, the pace of expansion of new work intakes increased in September and the creation of new jobs improved over the previous month. HSBC concluded that, “[the] services sector bottomed out in September thanks to stronger new business flows. However, business sentiment continues to deteriorate after a strong post-election uptick.” Moreover, HSBC pointed out that, “a pick in reform effort is sorely needed to put growth on a firmer footing and address supply side risks to inflation.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 3.6% in 2014, which is down 0.1 percentage points from last month’s estimate. For 2015, the panel expects fixed investment to increase 5.8%.


Author:, Senior Economist

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India PMI September 2014

Note: HSBC India Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: HSBC and Markit.


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