India's Economy Surges as PMI Index Hits New Heights

India's economic expansion quickened in October, as per the HSBC Flash India Composite PMI Output Index reaching 58.6. The growth, largely driven by manufacturing and services, marks 39 months of consecutive growth, with robust hiring activities reflecting an uptick in domestic and international demand.

The HSBC Flash India Composite PMI Output Index climbed to 58.6 in October, up from 58.3 in September, depicting a faster pace of economic expansion in India. According to the HSBC Flash PMI survey by S&P Global, this marks a remarkable 39 months of consecutive growth, far exceeding the long-term average of 54.7. India's private sector demonstrated robust growth during the month.

Propelling this growth was a notable uptick in manufacturing production and services activity. The manufacturing sector surged, with the HSBC Flash India Manufacturing PMI increasing to 57.4 from 56.5, while the Manufacturing Output Index ascended to 60.1 from 59.8. This signals a strong recovery in manufacturing, buoyed by a substantial increase in new orders and faster export sales, reflecting boosted international demand for Indian goods and services. The services sector also made steady strides, with the Business Activity Index rising to 57.9, slightly up from 57.7.

Pranjul Bhandari, Chief India Economist at HSBC, remarked that the manufacturing industry regained momentum in October after a short lull over the preceding months. Bhandari acknowledged the accelerated growth in new and export orders, suggesting favorable prospects for industrial production in the latter months of 2024, despite ongoing input price inflation pressures affecting profit margins. Manufacturers are attempting to pass these costs onto consumers by hiking output prices.

Hiring significantly increased, especially in the service sector, reaching an 18-and-a-half-year high with manufacturing also contributing to the strongest employment growth since February 2006. Businesses boosted their workforce across full-time and part-time roles, increasing both permanent and temporary contracts to meet demand.

October revealed slight capacity pressure rises as backlogs grew at service providers while marginally declining in manufacturing firms, leading to enhanced hiring in services. Input cost inflation hit a three-month high with price hikes seen in commodities such as chemicals, steel, and food products. Manufacturing saw its sharpest rise in selling prices in 11 years, as firms sought to pass on rising costs to consumers. Inflationary pressures caused the private sector's charge inflation to peak, with optimism about demand remaining strong despite challenges.

(With inputs from agencies.)