India’s Private Sector Growth Cools to Three-Month Low

The slowdown reflects a broader malaise affecting both manufacturing and services, with the latter recording its weakest performance in 17 months. Pranjul Bhandari, HSBC’s Chief India Economist, noted that inventory-building has lost momentum following a period of intense activity earlier this year. Companies are navigating a landscape defined by fierce market competition, fluctuating fuel costs, and localized gas shortages, which have collectively dampened the appetite for new orders.

This shift in demand has directly curtailed hiring. Employment growth has reached its lowest point in a six-month sequence, as firms report that current staffing levels are sufficient to manage existing business volumes. Furthermore, while input costs continue to climb—driven by expenses for chemicals, food, and utilities—the rate of inflation has reached a five-month low. Businesses remain hesitant to pass these costs on to consumers, opting instead to absorb price pressures to maintain market share.

Confidence regarding the coming year has also dimmed. Sentiment among manufacturers has tumbled to a near four-year low, prompting a pullback in purchasing activity. With purchasing growth at its slowest level in thirty months, businesses are prioritizing the reduction of finished goods inventories over further production expansion.