India’s private sector activity strengthened in September, with the HSBC Flash Composite PMI rising to 56.5 from 54.3 in August. 

The improvement was led by a stronger manufacturing sector, while services activity also picked up. The reading remained above 50, indicating continued expansion in business activity.

The HSBC Flash India Manufacturing PMI climbed to 55.7 in September from 52.8 in August, marking the sector’s strongest improvement in seven months. Manufacturing output also increased sharply, with the output index rising to 58.2 from 54.8. Companies reported stronger demand for products including aluminium, electronics, food, pharmaceuticals and new product models.

The services sector also recorded faster growth. The HSBC Services PMI Business Activity Index rose to 55.8 in September from 54.1 in August. Service providers reported stronger demand for property and transport services, travel bookings and software and digital solutions.

Domestic demand remained an important driver of the improvement. New business increased at a faster pace across manufacturing and services, while employment continued to grow as companies added workers to meet higher output and orders.

However, the export picture was less positive. New export orders continued to rise but expanded at their slowest pace in nearly three years. The slowdown was mainly linked to weaker growth in overseas demand for services, although manufacturers recorded a modest improvement in export business.

Cost pressures also showed some signs of easing. Overall private-sector input-cost inflation fell to its lowest level since January, helped by softer cost pressures among service providers. However, manufacturers faced higher costs for items such as fuel, metals, food, pharmaceutical ingredients and technology resources. Factory-gate price inflation also increased.

Business confidence improved in September, with companies becoming more optimistic about output over the next 12 months. The survey also showed that manufacturers increased purchasing activity and built inventories, partly as a buffer against uncertainty linked to renewed tensions in the Middle East.

Despite the September rebound, the broader quarter remained softer than the previous one. The composite PMI averaged 55.1 in the July-September quarter, compared with 58.2 in April-June, suggesting that India’s growth momentum has moderated despite the latest improvement.

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