India’s Economic Growth Moderates, PMI Drops To 57.9

ENA Economy 2025-01-24 14:44:15 New Delhi, Jan 24 (KNN) India's economic momentum showed signs of deceleration in January 2025, with business activity expanding at its slowest pace in over a year, according to a recent survey by HSBC and SP Global. The Composite Purchasing Managers' Index dropped to 57.9, marking the lowest reading since November 2023, though still indicating continued economic expansion. The services sector, a critical driver of India's economy, experienced significant challenges, with new domestic business growth reaching its weakest point in 14 months. This sector's index fell to 56.8, the lowest in 26 months, raising concerns about the sustainability of the nation's economic performance. Government estimates currently project overall growth at 6.4 percent for the fiscal year. Contrasting the services sector's performance, manufacturing remained robust, with its Purchasing Managers' Index reaching a six-month high of 58.0. Manufacturers observed a surge in new orders and output, presenting a nuanced economic landscape with sectoral disparities. Despite the growth moderation, several positive indicators emerged. International demand showed improvement, with exports experiencing their fastest growth in six months. Notably, job creation reached an unprecedented level, marking the highest composite employment figures since the survey's inception in December 2005. Inflationary pressures presented additional complexity, with cost inflation spiking in the services sector to its highest level since August 2023. Services firms increasingly passed rising costs to clients, potentially complicating the monetary policy considerations for the Reserve Bank of India, which is set to meet February 5-7 under new Governor Sanjay Malhotra. The business outlook for the coming year reflects mixed sentiments. Manufacturing companies displayed heightened optimism, reaching their most positive projection since May 2024. Conversely, services firms exhibited a more cautious perspective, with competitive concerns dampening their outlook. As India navigates these economic nuances, the intricate balance between sectoral performance, employment dynamics, and inflationary pressures continues to shape the country's economic narrative in the early weeks of 2025. (KNN Bureau) 40774 https://knnindia.co.in/news/newsdetails/economy/indias-economic-growth-moderates-pmi-drops-to-579 2025-01-24 14:44:15 knnindia.co.in India’s Economic Growth Moderates, PMI Drops To 57.9