India's Private Sector Growth Slows To Over Three-Year Low In July: HSBC Flash PMI

New Delhi, Jul 24 (KNN) India's private sector activity expanded at its slowest pace in more than three years in July as weaker domestic demand and challenging market conditions weighed on business activity, according to the HSBC Flash PMI survey by S&P Global.

Private Sector Growth Slows to Over Three-Year Low

The HSBC Flash India PMI Composite Output Index declined to 54.3 in July from 57.1 in June, marking the weakest expansion in private sector output since March 2022. Although the index remained above the 50-mark, indicating continued growth, the pace moderated significantly.

The survey attributed the slowdown to challenging market conditions, increased competition, order cancellations, lower client enquiries and shortages of key raw materials.

New Business Growth Weakens, Services Sector Slows

Growth in new business also eased to its weakest level in nearly four-and-a-half years, with the moderation driven largely by the services sector. 

Services activity expanded at its slowest pace in 53 months, while the manufacturing sector regained some momentum after softer growth in previous months.

Export Orders Remain a Key Bright Spot

Export demand remained a bright spot, with new export orders strengthening across both manufacturing and services. The overall increase in international sales was the strongest since March, led by manufacturing firms.

HSBC Chief India Economist Pranjul Bhandari said renewed tensions in the Middle East prompted firms to build inventory buffers to manage supply-side uncertainties. 

Companies increased purchases as well as stocks of inputs and finished goods, while output and export orders continued to grow.

The survey also showed input costs and output prices rose at a faster pace in July, driven by higher fuel, labour, material and transportation costs. Businesses increased selling prices at the fastest rate since April to protect profit margins.

Hiring Continues Despite Softer Confidence

Employment continued to expand for the seventh consecutive month, with hiring activity strengthening modestly. Service providers added jobs at a faster pace than manufacturers, even as firms reported some easing in backlogs.

Business confidence weakened to a six-month low, with optimism declining in the services sector while improving modestly among manufacturers. Firms remained optimistic about stronger demand and improved market conditions over the coming year.

Separately, the HSBC Flash India Manufacturing PMI eased marginally to 53.9 in July from 54.2 in June, indicating continued but slower improvement in overall manufacturing conditions.

(KNN Bureau)