Notable rebound in sentiment among Indian private sector firms: Survey

Expectations that demand trends will remain favourable underpinned upward revisions to confidence surrounding output, employment and capital expenditure. In all cases, the aforementioned net balances were above their respective global averages.

Selling price inflation looks set to intensify, as panellists forecasts stronger increases in both staff and non-staff costs.

However, India is likely to experience milder price pressures compared to the global average. Rising from 23 per cent in June to 33 per cent in October, the business activity net balance highlighted more upbeat expectations for the year-ahead outlook for output.

This figure was above both the global (24 per cent) and emerging market (20 per cent) averages. The reading for the manufacturing sector rose by the same amount and posted a reading of 33 per cent.

In addition to highlighting demand strength as the main reason to be optimistic, survey participants commented on new product releases, export opportunities, projects pending approvals, technology investment and marketing initiatives.

Some firms also expect to lift their client bases through competitive pricing policies.

Potential challenges to growth prospects include fierce competition, cost pressures and clients' requests for discounts, an S&P Global release said.

Reflecting predictions of new business gains and plans to scale up production volumes, private sector companies intend to expand operating capacities by recruiting additional workers. Hiring plans were at their highest in ten years.

Recruitment goals were upgraded by Indian goods producers. Indian companies also boosted their capital allocation targets in October.

Investment plans were much more positive among manufacturing firms than at their services counterparts, especially regarding research and development.

Concurrently, a net balance of 12 per cent of goods Indian producers foresee higher capital expenditure in 2025, compared with 8 per cent in June. Underlying data suggested that investment objectives were partly fuelled by strengthening profits sentiment.

Confidence around earnings reached its highest level since February 2015. Degrees of optimism among Indian manufacturers was 29 per cent.

October data showed that while private sector companies in India foresee higher cost burdens in the year ahead, they expect to also have greater pricing power. All three of the survey's price measures rose in the latest month.

Fibre2Fashion News Desk (DS)