(Bloomberg) -- India’s economic activity slipped slightly in August as new order growth for the manufacturing sector slowed, a flash survey by HSBC Holdings Plc showed.
The manufacturing purchasing managers’ index dropped to a three-month low of 57.9 from 58.1 in July, while the services purchasing managers’ index rose to 60.4 from 60.3 in the previous month. That resulted in the composite index falling to 60.5 from 60.7 in July, the lowest reading since May.
The indexes are based on preliminary survey results and the final data will be released next month. A reading above 50 shows expansion in economic activity compared with previous month. A print below that signals a contraction.
“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 favorable market conditions,” said Pranjul Bhandari, chief India economist at HSBC, in the statement.
India’s gross domestic product is expected to expand more than 7% in the current fiscal year, making it one of the fastest-growing major economies in the world. Strong growth has given the central bank room to focus on taming inflation. The Reserve Bank of India has kept its policy rate unchanged for over 18 months now.
The manufacturing firms reported a decline in outstanding business volumes for the first time in eleven months, HSBC said. While firms remain optimistic, the level of business confidence moderated due to concerns over inflation and competition, it said.
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