India’s Business Activity Hits 3-Month High In November; Driven By Services Boom & Job Growth

As revealed in HSBC’s latest monthly survey, India’s business activity surged to its highest level in three months during November, propelled by strong performance in the services sector and unprecedented employment generation.

Pranjul Bhandari, Chief India Economist at HSBC stated, “Services saw a pick-up in growth, while the manufacturing sector managed to outperform expectations despite a marginal slowdown from its October final PMI reading.”

According to HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, the index rose to 59.5 in November from 59.1 in October, indicating steady expansion. PMI values above 50 denote growth, while those below suggest contraction.

Services PMI increased to 59.2 in November from 58.5 the previous month, marking its highest level since August.

Although manufacturing remained in growth territory, its PMI dipped marginally to 57.3 from October’s 57.5.

Demand Patterns: Domestic & Global

Domestic demand remained robust, driven by a rise in services-related sales, compensating for slower momentum in manufacturing.

Meanwhile, export demand strengthened significantly, with overseas orders for services reaching a four-month high.

This heightened activity has fueled business optimism for 2024, with confidence levels reaching their highest point since May.

The improved outlook encouraged firms to increase hiring, pushing employment generation to its fastest rate since the survey’s inception in December 2005.

However, inflation remains a concern. “Price pressures are rising for raw materials used by manufacturers, as well as food and wage costs in the services sector,” Bhandari added.

Exports Shine, Backed By Rising Global Trade Share

The Reserve Bank of India (RBI) noted in its November bulletin that India is making gains in global trade, particularly in key manufacturing segments.

The report asserted, “In fact, India currently holds 13 per cent or a sixth of the global market share in petroleum products, attesting to rising refining capabilities and ability to meet international standards.”

Private Consumption & Urban Growth Drive Domestic Demand

Private consumption resumed its role as a key growth driver, supported by festive season spending that spurred economic activity in Q3.

Retailers reported increased sales compared to Q2, with notable growth in high-end products such as luxury cars and electric two-wheelers during Diwali.

The trend of premiumization remained strong, signaling rising consumer affluence.

Additionally, urbanization is transforming India’s economic landscape, with the urban population projected to quadruple by 2025.

By then, half of India’s population will reside in cities, fueling long-term demand in urban centers.

Also Read: Government Initiatives Driving Foreign Investment In India: CII