Key facts
- India's private sector growth experienced its sharpest slowdown in over four years in July.
- The HSBC flash India Composite Purchasing Managers' Index (PMI) decreased to 54.3 in July from 57.1 in June.
- The services sector's business activity index fell to 53.1, its lowest reading since February 2022.
- Manufacturing activity saw a slight dip to 53.9, a four-month low.
- Export orders increased at the fastest rate since March, providing some support.
- Companies continued to hire, marking the seventh consecutive month of job growth.
India's private sector experienced a significant slowdown in July, with growth reaching its weakest point in over four years. The HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 54.3 from 57.1 in June, falling short of expectations for an increase to 57.7. The index remained above the 50-point threshold, indicating continued expansion.
The services sector was the primary drag, with its business activity index dropping to 53.1, the lowest since February 2022. This slowdown was attributed to challenging market conditions, order cancellations, and reduced client inquiries.
Manufacturing activity showed more stability but also eased to a four-month low of 53.9. However, output and new orders in manufacturing continued to expand at a robust pace, supported by strong demand from overseas markets.
Despite the overall slowdown, export orders saw their fastest growth since March. Firms maintained a positive business outlook and continued hiring for the seventh consecutive month, anticipating sustained demand.
Companies faced rising input costs, including higher fuel, labor, materials, and transportation expenses, leading to an increase in output price inflation to a three-month high as some costs were passed on to clients.