India's private sector economy maintained robust growth in November, as reflected in the HSBC Flash India Composite Output Index, which rose to 59.5 from October's final reading of 59.1. This marked the fastest growth rate in three months, fueled by new business and export sales gains.
However, the expansion came with heightened cost pressures, as companies reported the largest increase in selling prices since February 2013. Despite this, survey respondents expressed confidence in continued business growth.
The Flash PMI (Purchasing Managers' Index), released ahead of the final PMI data, offers an early snapshot of economic activity. It is based on approximately 85–90 per cent of survey responses and provides valuable insights into business trends and economic conditions. The final PMI data for November will be released on December 4, 2024.
The manufacturing sector saw a slight slowdown in November, with the Manufacturing PMI Output Index falling to 60.2 from October’s 60.4. The overall Manufacturing PMI, which reflects factory business conditions, edged down to 57.3 from 57.5 in October. Despite this dip, manufacturing remained a key driver of growth, supported by solid demand and export sales.
The services sector experienced improved growth in November, with the Services PMI Business Activity Index rising to 59.2, up from 58.5 in October. Employment in the services sector surged at its fastest rate since the survey began in December 2005, surpassing job creation in the manufacturing sector.
Both the manufacturing and services sectors saw significant increases in new orders, driven by strong domestic demand and rising export sales to Asia, Europe, and the Americas. Manufacturing firms experienced slightly stronger growth in international sales compared to their counterparts in services.
Work backlogs increased across sectors, highlighting capacity pressures. In response, companies accelerated hiring, leading to 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.”
Cost pressures intensified in November, with manufacturing firms reporting higher input costs for materials such as aluminium, cotton, and rubber. Meanwhile, service providers cited rising food prices—particularly for cooking oils, meat, and vegetables—as well as increased wage bills.
In response, businesses raised selling prices at the fastest rate since February 2013. Despite the price hikes, demand remained strong, allowing firms to pass on the increased costs to customers without significantly impacting sales.
Business optimism saw a notable improvement in November, with the Future Output Index reaching a six-month high. Survey respondents pointed to strong demand, effective marketing strategies, and a surge in new client inquiries as key factors driving their confidence in sustained growth over the coming year.