Post by : Badri Ariffin

India’s private sector activity expanded at its slowest pace in six months in November, highlighting a slowdown in manufacturing that offset modest gains in services.

The latest HSBC flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, dropped to 59.9 in November from 60.4 in October, slightly below market expectations. While still above the 50-point mark that separates growth from contraction, the three-month decline indicates that India’s economic pace is easing.

Manufacturing Takes a Hit

The manufacturing sector slowed significantly, with the flash India Manufacturing PMI falling to 57.4, the weakest since February. Factory output growth weakened as businesses reported softer new orders. Survey participants cited heavy rainfall in parts of the country and stiff competition in global markets as key factors affecting demand. Analysts noted that the initial boost from the GST-driven consumption may have plateaued, contributing to the subdued activity.

Services Offer Some Relief

The services sector, which forms a significant portion of the economy, continued to expand but at a slightly faster pace, with its PMI rising to 59.5 from 58.9. This helped cushion the overall slowdown in private sector activity, keeping growth in positive territory despite global and domestic headwinds.

Exports and Trade Pressures

New export orders showed the slowest growth since March, reflecting the impact of 50% U.S. tariffs on certain Indian imports. India’s merchandise trade deficit reached record highs in November, with shipments to the U.S. falling nearly 9% year-on-year. The government recently announced plans to spend over $5 billion in credit guarantees and bank loans to counter the effect of these tariffs.

Signs of Easing Inflation

Inflationary pressures cooled during the month, with input costs rising at the slowest rate in over five years and output charges seeing an eight-month low. Consumer inflation hit a record low of 0.25%, raising expectations for potential monetary policy easing. Economists anticipate that the Reserve Bank of India may cut its key repo rate in the near future to support growth.

Outlook and Employment Trends

Optimism among businesses about year-ahead output slipped to its lowest level since July 2022. Job creation also slowed to its lowest pace in over 18 months, reflecting cautious sentiment amid rising global uncertainties and domestic economic challenges.

#Business News