HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 54.3 in July from June’s 57.1, confounding a Reuters poll median forecast for a jump to 57.7. However the index remained above the 50-mark separating growth from contraction.
Read more: India’s private sector growth slows to three-month low in June as demand weakens, costs rise: HSBC PMI
Export orders offered a brighter spot with international sales growing at the fastest pace since March.
Among sectors, services was the biggest lag. The business activity index fell to 53.1 from June’s 57.4 – its weakest reading since February 2022 – weighed by challenging market conditions, order cancellations and reduced client enquiries.
Manufacturing was steadier but not strong enough to change the broader trend. The factory activity index eased to a four-month low of 53.9 from 54.2. Output and new orders continued to expand at a stronger pace helped by robust demand from overseas markets.
July’s surveys showed the unusually strong momentum of the past two years is beginning to fade. A sharper slowdown in services, which have powered much of India’s recent growth, leaves the economy increasingly reliant on manufacturing, a sector that has yet to show signs of accelerating.Read more: Private bank ETFs back in focus as valuations turn attractive
Overall business outlook remained positive with firms continuing to hire for a seventh consecutive month in anticipation of demand holding up.
Companies were hit by input costs rising at a quicker pace due to higher fuel, labour, materials and transportation expenses, passing some of them to clients. Output price inflation reached a three-month high.