India’s economic growth accelerates in October as PMI rises to 58.6

New Delhi [India], October 24 (ANI): The HSBC Flash India Composite PMI Output Index rose to 58.6, up from 58.3 in September, signalling a quicker pace of expansion in the country’s economy, according to HSBC Flash PMI survey compiled by S&P Global.

This marked the thirty-ninth consecutive month of growth, with the figure significantly surpassing the long-term average of 54.7. India’s private sector showed strong growth in October.

The acceleration in growth was largely driven by quicker increases in both manufacturing production and services activity.

The manufacturing sector led the growth, with the HSBC Flash India Manufacturing PMI climbing to 57.4 from 56.5, while the Manufacturing Output Index reached 60.1, up from 59.8.

This improvement signaled a strong recovery in manufacturing conditions, supported by a sharp increase in new orders. The uptick in manufacturing sales outpaced that of the services sector, despite growth in both areas. Additionally, export sales expanded at a faster rate, reflecting an improvement in international demand for Indian goods and services.

The services sector also saw steady progress, with the Business Activity Index rising to 57.9, compared to 57.7 in the previous month.

Pranjul Bhandari, Chief India Economist at HSBC, noted, “India’s flash manufacturing PMI indicated that the manufacturing industry regained growth momentum in October. Several components accelerated after a modest slowdown over the past two to three months.”

“New orders and new export orders expanded at faster rates, providing a good omen for industrial production for the remaining months of 2024. Manufacturers’ profit margins are still under pressure as input price inflation continued to pick up pace. Manufacturers are trying to pass on higher costs to downstream consumers by raising output prices,” Bhandari added.

Hiring activity surged, particularly in the service sector, where the increase in employment reached an 18-and-a-half-year high.

Manufacturing also saw a notable rise in jobs, contributing to the strongest growth in overall employment since February 2006. Businesses added both full-time and part-time workers, with an increase in permanent and temporary contracts to meet demand.

October data indicated a mild rise in capacity pressures, with backlogs increasing at service providers while slightly declining at manufacturing firms. This trend led to more pronounced hiring in the service industry, where business volumes reached the highest level in three months.

Input cost inflation picked up to a three-month high, with price increases reported for various commodities, including chemicals, steel, and food products.

Manufacturers saw the sharpest rise in selling prices in 11 years, as they sought to pass on higher costs to consumers. The rate of charge inflation for the private sector as a whole also reached a three-month peak, with firms across both sectors raising prices in response to ongoing cost pressures.

While manufacturing sentiment improved to its highest level since July, optimism faded slightly in the services sector. Overall, business confidence remained above the long-term average, indicating that companies expect demand conditions to stay favorable despite inflationary challenges.