India business activity rebounds in September to 3-month high, PMI shows

India's business growth surged in September, reaching its highest level in three months, according to a preliminary survey conducted by HSBC. The Composite Purchasing Managers' Index (PMI) jumped to 56.5 from the previous month's 54.3, marking its peak since June and surpassing analysts' expectations. A reading above 50 signifies expansion in the economy.

However, this rebound did not signal a reversal of the broader slowdown during the quarter. The composite index averaged 55.1 for the entire period, down from 58.2 in the April-June quarter, indicating softer growth for Asia's third-largest economy after a forecast-beating 7.8% expansion in the previous quarter.

The manufacturing PMI rose to 55.7 from 52.8, its highest level in seven months, as output and new orders expanded at a faster pace. Additionally, goods producers resumed hiring after a minor dip in August. Meanwhile, the services PMI increased to 55.8 from 54.1, reflecting improved conditions in this sector. However, new exports rose at the slowest pace in 33 months, counterbalancing a modest increase in manufacturing exports and reducing overall export growth. Hiring in the services sector also experienced a decline in momentum.

On a positive note, input-cost inflation eased to its lowest level since January, primarily driven by the services sector, providing businesses some relief. However, selling-price inflation remained broadly unchanged, which suggests that consumers did not experience significant relief from rising prices. Despite these mixed signals, business confidence about the coming year rose to a four-month high.