Australia Private Sector Slows as India Business Activity Hits High

Private sector performance diverged across the Asia-Pacific region in September. In Australia, growth slowed to its weakest pace of the third quarter, with the S&P Global Flash Composite PMI falling to 50.8 from 52.7 in August. The manufacturing sector entered contraction as its PMI dropped to 49.3, marking the fastest decline in factory output in 21 months. Labor market conditions also deteriorated, with private sector employment seeing its steepest decline since October 2020.

Despite the slowdown, Australian input cost inflation reached a three-month high, fueled by energy and fuel costs linked to Middle East conflicts. These conditions precede a September 29 policy decision by the Reserve Bank of Australia, where a rate hike to 4.60% is widely expected.

Conversely, India's private sector activity reached a four-month high, with the HSBC Flash India Composite PMI rising to 56.5. This expansion was led by a seven-month high in manufacturing, supported by strong demand for pharmaceuticals, electronics, and food. While domestic hiring increased, new export orders grew at their slowest pace in nearly three years. Companies in India increased inventories to buffer against uncertainty stemming from Middle East tensions.