India's Business Activity Surges to Three-Month High Amid Rising Costs
New Delhi, November 24, 2024- India's business activity reached its strongest level in three months, with the HSBC Flash India Composite Purchasing Managers Index showing a robust expansion of 59.5 in November, driven by strong demand in both manufacturing and services sectors.
The composite index, which combines data from manufacturing and services sub-indicators, saw a faster expansion growth in new orders and output compared to October's reading of 59.1. However, it was the services sector where job creation was most prominent, with service providers recording a sharp uptick in employment.
"Services saw a pick-up in growth, while the manufacturing sector managed to outperform expectations despite a marginal slowdown. Strong end-demand and improving business conditions led to a record high in services sector employment, the highest level since December 2005," said Pranjul Bhandari, Chief India Economist at HSBC.
The HSBC Flash India Manufacturing PMI, however, showed a slight dip from October's levels, standing at 57.3. Despite this, manufacturing growth was still significant, with new orders driving the sector's expansion rate to its fastest level since August.
Cost pressures across India's private sector intensified in November, reaching their highest point since August 2023. Manufacturers reported higher prices for various raw materials, including aluminum, cotton, leather, and rubber, while service providers faced increased costs for essential ingredients like cooking oils, eggs, meat, and vegetables, in addition to rising wage bills.
The data reflects a robust business environment in India, driven by strong demand in both manufacturing and services sectors. However, the rapid growth is tempered by rising cost pressures, which are challenging businesses across the country.
"We need to monitor these developments closely and assess their impact on inflation and business activity," said Bhandari. "While the data points to a robust economy, it's essential for policymakers to keep a close eye on the indicators to ensure that this growth translates into sustainable economic outcomes."