PMI: Retreating momentum dents confidence of services, manufacturing firms

Business activity in India’s manufacturing and services industries softened as companies grappled with subdued demand, increased competition and inflationary pressures.The seasonally adjusted HSBC India Services Purchasing Managers' Index (PMI) Business Activity Index hit an 11-month low of 58 in December, falling from 59.8 in November. With slower new work orders and easing output, companies refrained from recruiting additional staff.Plus, operating expenses rose, with cost pressures reportedly stemming from building items, chemicals, medical supplies, salaries, vegetables and office maintenance fees.“Anecdotal evidence suggested that growth was constrained by a greater presence of alternative providers and cheaper services offered elsewhere,” the services PMI survey report said.

So, despite elevated costs, fewer than 3% of services companies hiked their fees.In the manufacturing sector too, there were increased competitive pressures and subdued sales of specific items, severely hurting intakes of new work.The seasonally adjusted headline HSBC India Manufacturing PMI slid to a two-year low of 55 in December from 56.6 in November. A part of the slowdown in sales was due to lower international orders.PMI’s new export orders sub-index rose at its slowest pace in 14 months.

As a fallout of US tariffs, Indian manufacturers are diversifying exports to other regions, but the pain may continue.Nomura’s leading index of Asia ex-Japan’s aggregate exports (NELI) ticked down to 95.5 in January. NELI has a three-month lead time.

This decline primarily reflects a slowdown in China’s imports from Asia, as well as a deterioration in manufacturing sentiment in China and the US, it said. Nomura Global Markets Research cautioned that