India's private sector growth hits four-year low in July

India's private sector grew at its weakest pace in four years this July, according to the HSBC India Composite Purchasing Managers' Index (PMI). The reading, which tracks both manufacturing and services, slipped below key thresholds as demand softened and new orders slowed. The slowdown comes amid persistently high interest rates set by the Reserve Bank of India (RBI) to curb inflation, as well as global economic headwinds from weak export markets. Small and medium enterprises reported the most strain, while larger firms managed to sustain moderate activity. The data raises concerns about the pace of economic recovery after a strong post-pandemic rebound. Economists note that while consumption in rural areas has shown some resilience, urban demand appears to be tapering. The services sector, which had been robust in previous months, also decelerated sharply. Manufacturing output, meanwhile, faced its steepest decline in production since early 2021. The RBI has held its key repo rate at 6.5% since February 2023, aiming to keep retail inflation within its 2-6% target band. The PMI data adds to a series of mixed economic signals, including slower industrial output growth and a widening trade deficit. For consumers, the slowdown could mean fewer discounts and lower job creation in the near term. Policymakers now face the challenge of supporting growth without reigniting price pressures.