India’s private sector economy continued its strong growth in November, according to the HSBC Flash India Composite Output Index, which rose to 59.5, up from October’s final reading of 59.1. This marked the sharpest rate of growth in three months, driven by new business gains and export sales.
However, the expansion was accompanied by a surge in cost pressures, with firms reporting the highest rate of selling price increases since February 2013. Despite this, survey respondents showed confidence in business picking up.
What is Flash PMI?
Flash PMI (Purchasing Managers’ Index), released ahead of the final PMI data, provides an early snapshot of economic activity. It is based on approximately 85–90 per cent of survey responses. It offers insights into business trends and economic conditions. The final PMI data for November will be released on 4 December, 2024.
Manufacturing PMI: Marginal slowdown in growth
The manufacturing sector experienced a slight deceleration in November, with the Manufacturing PMI Output Index dipping to 60.2 from October’s 60.4. The overall Manufacturing PMI, which reflects factory business conditions, declined marginally to 57.3 from 57.5 in October. Despite this, manufacturing remained a key driver of growth, buoyed by strong demand and export sales.
Services PMI: job creation hits record high
The services sector saw an improvement in growth, with the Services PMI Business Activity Index rising to 59.2 in November from 58.5 in October. Employment in services surged at the fastest rate since the survey’s inception in December 2005, outpacing job creation in the manufacturing sector.
New orders drive growth in November
Both manufacturing and services reported significant increases in new orders, supported by robust domestic demand and growing export sales to Asia, Europe, and the Americas. Manufacturing firms recorded slightly stronger international sales growth than their counterparts in services.
More From This Section
Premium
Adani saga: Lack of takers for RE key reason behind corruption case
Microfinance lending jumps 10% to Rs 40,840 crore in Uttar Pradesh
Ensure employees' UAN is active to avail ELI scheme benefits: Govt to EPFO
Premium
Govt looks to reduce red tape and unmoor port infrastructure delays
Premium
India may land in top 5 with 12.7% growth in airline seat capacity
Backlogs of work rose across sectors, reflecting capacity pressures. To address these, firms ramped up hiring, resulting in the fastest rate of job creation in India’s private sector since December 2005.
Chief India Economist at HSBC Pranjul Bhandari said, “Strong end-demand and improving business conditions pushed services sector employment to the highest level ever recorded by this indicator since December 2005. Meanwhile, price pressures are rising for raw materials used by manufacturers, as well as food and wage costs in the services sector.”
Rising costs and inflation
Intensifying cost pressures were a dominant theme in November. Manufacturing firms reported higher input costs for materials such as aluminium, cotton, and rubber, while service providers cited rising food prices, including cooking oils, meat, and vegetables, as well as increased wage bills.
In response, businesses raised selling prices at the fastest pace since February 2013. Despite the price hikes, demand remained resilient, enabling firms to pass on the costs to customers without significantly affecting sales.
Business confidence at a six-month high
Business optimism improved markedly in November, with the Future Output Index reaching a six-month high. Survey respondents highlighted strong demand, effective marketing strategies, and an influx of new client enquiries as reasons for their confidence in sustained growth over the coming year.
Also Read
RBI likely to keep rates steady as economic growth slows, global rates ease
Demand slowdown pulls down services PMI to 10-month low in September
Rupee at closing low; RBI intervention prevent from touching 84 per dollar
India's services sector growth surges to 5-month high in August: PMI
India's services growth remains robust even as it slows a tad in July: PMI