India’s economic momentum gained pace in November, with business activity reaching a three-month high. The growth was primarily driven by an impressive expansion in the services sector, coupled with record-breaking job creation, as per HSBC’s latest survey for the month.
HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, increased to 59.5 in November, up from 59.1 in October, signaling consistent economic expansion. It’s worth noting that a PMI reading above 50 denotes growth, while below 50 indicates contraction.
The services sector PMI climbed to 59.2 in November, up from 58.5 in October, marking its highest performance since August. This growth indicates surging demand and robust business activity within the sector.
While the manufacturing PMI saw a marginal dip from 57.5 to 57.3, the sector maintained its growth trajectory, defying broader economic concerns and outperforming market expectations.
The uptick in business activity was underpinned by a sharp rise in domestic demand, especially in the services industry. Simultaneously, export demand witnessed a four-month high, with services exports playing a pivotal role in this growth.
India has captured 13% of the global market share in petroleum products, reflecting its enhanced refining capabilities.
The outlook for India’s exports remains optimistic, with festival-led demand bolstering overall activity.
One of the standout findings of the HSBC report was the record-breaking growth in employment. Job creation soared at the fastest pace since the survey’s inception in December 2005, signaling rising consumer confidence and economic health.
“This uptick in hiring highlights the resilience of the Indian economy and the growing spending power of its population,” the report added.
Despite the positive indicators, inflationary pressures remain a cause for concern.
Rising raw material costs have added strain on the manufacturing sector.
Food and wage costs have also surged in the services sector, potentially tempering future growth.
Pranjul Bhandari, Chief India Economist at HSBC, stated:
“Price pressures are rising for raw materials used by manufacturers, as well as food and wage costs in the services sector.”
Private consumption emerged as a key growth driver, buoyed by festive season spending and evolving consumer preferences.
The luxury car segment experienced a surge in sales, signaling increased demand for premium products.
E-two-wheelers sparkled this Diwali, reflecting a growing interest in sustainable mobility solutions.
India’s urbanization is also reshaping consumption patterns. By 2025, half of India’s population is expected to live in cities, significantly boosting urban demand.
India’s business activity has demonstrated resilience and adaptability, supported by robust domestic and export demand. However, challenges like inflation and sectoral disparities need to be addressed for sustained growth.
With a proactive approach by policymakers, businesses, and industry leaders, India can leverage this momentum to solidify its position as a global economic powerhouse.
India’s business activity hitting a three-month high in November showcases the resilience and adaptability of its economy. The robust performance of the services sector, coupled with record employment generation, highlights the country’s strong domestic and export demand. As India continues to gain a foothold in global trade, sectors like manufacturing and petroleum products underscore its growing competitiveness on the international stage.
However, the challenge of rising inflation looms large, posing risks to sustained growth. Addressing price pressures on raw materials, food, and wages will be critical to maintaining this positive trajectory.
Looking ahead, India’s urbanization and evolving consumer trends present immense opportunities for businesses and policymakers to drive inclusive and sustainable growth. With proactive strategies to tackle inflationary pressures and build on the existing momentum, India is well-positioned to strengthen its economic outlook and achieve long-term prosperity.