India Retains Fastest Growing Economy Status

New Delhi: Despite having a buzz of slowdown in the global economy, India is expected to hold on to its title of fastest-growing major economy over coming quarters as the country's business activity extended its robust growth streak in August. The services sector also continued to drive the economy forward, while the manufacturing activity slightly eased due to a slowdown in new orders and production as well, a private survey showed on Thursday.

As per the latest HSBC Flash India PMI (Purchasing Managers’ Index) survey, it, however, indicated that there was a strong output from India’s private sector for the 37th consecutive month in August, highlighting a sharp upturn in new business intakes, solid job creation and upbeat expectations towards growth prospects. “On the price front, there were softer increases in both input costs and selling prices,” the survey showed.

The headline HSBC Flash India composite output is a seasonally adjusted index that measures the month-on-month change in the combined output of India’s manufacturing and service sectors. “The HSBC Flash India Composite PMI output Index was 60.5 against July final 60.7, while HSBC Flash India services PMI business activity index was 60.4 against July final 60.3 and manufacturing PMI output Index was 60.9 against July final 61.7,” the survey showed.

Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC, said that India’s flash composite PMI slipped slightly in August, though it remained significantly higher than the historical average. “The manufacturing sector experienced a softer rise in output, while services firms saw a slightly quicker rise in business activity. Although new order growth for the manufacturing sector slowed to the weakest since February, the pace of expansion remained sharp, indicating continued strong demand and favourable market conditions,” Bhandari said.

“Notably, output price inflation in the manufacturing sector rose to an 11-year high, despite a slight slowdown in input prices, suggesting that manufacturers were able to pass on higher prices to customers. Additionally, there were signs of capacity pressures across the private sector, as evidenced by a further increase in backlogs of work. However, manufacturing firms reported the first decline in outstanding business volumes for the first time in eleven months, while service providers indicated another monthly rise,” he added.

The survey further said that amid reports of demand strength and favourable market conditions, alongside brand recognition and successful advertising, private sector companies in India experienced another increase in new orders midway through the second fiscal quarter. “Despite slowing to the weakest since May, the pace of expansion was sharp and the rates of growth were broadly similar at goods producers and service providers,” it added