Business activity slips in August as manufacturing eases: Survey

India's business activity moderated in August as manufacturing activity eased, weighed down by a slowdown in new orders and production, even as the services sector continued to drive the economy forward, a private survey showed Thursday.

The headline HSBC Flash India Composite Output Index, a seasonally adjusted index that measures month-on-month change in the combined output of India's manufacturing and service sectors, was 60.5 in August, little changed from 60.7 in July.

The reading on the index remained above the 50-mark, which separates expansion from contraction for the 37th consecutive month. Flash PMI records 75-85% of the total 800 Purchasing Managers Index (PMI) survey responses by services and manufacturing firms received every month.

Pranjul Bhandari, chief India economist at HSBC, said the manufacturing sector experienced a softer rise in output while services firms saw a slightly quicker expansion in business activity.

"Although new order growth for the manufacturing sector slowed to the weakest since February, the pace of expansion remained sharp, indicating continued strong demand and favourable market conditions," Bhandari said.

Services companies saw a stronger upturn in international sales than manufacturing. At the composite level, new export orders rose at the weakest pace since April, though it was among the quickest since the PMI series started a decade ago.

The India Services PMI Business Activity Index inched up to 60.4 in August from 60.3 in July, while the Flash India Manufacturing PMI Output Index declined to 60.9 in August from 61.7 in July, and the Flash India Manufacturing PMI fell to 57.9 from 58.1.

As per the survey report, output price inflation in the manufacturing sector rose to an 11-year high, despite a slight slowdown in input prices, suggesting that manufacturers were able to pass on higher prices to customers.