HSBC Flash PMI: India's Private Sector Growth Slows to Lowest Since March 2022; Composite Index Falls to 54.3!

India's private sector activity slowed in July, with the HSBC Flash India Composite PMI Output Index falling to 54.3 from 57.1 in June. The reading was the lowest since March 2022, as per a Reuters report.  

Although growth weakened, the index remained above the 50-point mark, showing that business activity continued to expand during the month. 

Services Sector Leads the Slowdown 

The decline was largely driven by the services sector. The HSBC Flash India Services PMI Business Activity Index dropped to 53.1 from 57.4 in June, its weakest reading since February 2022.  

The report suggests that businesses cited slower customer enquiries, order cancellations, stronger competition, and challenging market conditions. The pace of order growth also slowed to its weakest level in nearly four-and-a-half years, indicating softer domestic demand. 

Manufacturing Activity Remains Steady 

Factory activity remained relatively stable despite a marginal decline in the headline index. The HSBC Flash India Manufacturing PMI eased to 53.9 in July from 54.2 in June. However, the Manufacturing Output Index rose to 57.0 from 56.3, indicating continued growth in production.  

Manufacturers also reported higher purchasing activity, improved supplier delivery times and an increase in inventories of both raw materials and finished goods. 

Exports Continue to Support Activity 

Demand from overseas markets remained steady during the month. New export orders increased across manufacturing and services, with manufacturers recording stronger growth than service providers.  

At the overall level, export sales expanded at the fastest pace since March. Employment also increased for the seventh consecutive month, though hiring remained modest. Service providers accounted for a larger share of the new jobs added during July. 

Costs Rise Across Businesses 

Input costs increased at a faster pace than in June as businesses faced higher fuel, labour, transportation, and raw material expenses. Part of these higher costs was passed on to customers, resulting in the fastest increase in selling prices since April.  

The survey also showed that business confidence slipped to a six-month low, even as companies continued to expect demand to remain stable over the coming months. 

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Conclusion 

The July flash PMI showed slower business activity across India's private sector, led by weaker services growth. Manufacturing output, export orders, and hiring continued to record expansion during the month. 

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