Weekly Economic Outlook: September 22-28, 2025
- Remin Francis I R
- Sep 29
- 2 min read
As September draws to a close, the Indian economy continues to fire on multiple cylinders, though not without a few speed bumps. Infrastructure output is growing at its fastest pace in a year, PMI readings remain comfortably in expansion territory despite easing from record highs, and forex reserves are holding near their historic peak. Together, these signals paint a picture of an economy that is still resilient, even as global headwinds and competitive pressures test its strength.
India’s infrastructure output expanded by 6.3% year-on-year in August 2025, the sharpest pace in a year and well above July’s revised 3.2%. The rebound was largely powered by coal (11.4%), steel (14.2%), and cement (6.1%), as firms stepped up capacity ahead of higher US tariffs expected by month-end. Interestingly, Chinese competitors were forced to trim output during this period due to Beijing’s policy of maintaining clear skies for their military parade, indirectly supporting India’s production momentum. On the petroleum side, refinery products rebounded by 3%, though natural gas (-2.2%) and crude oil (-1.2%) stayed in contraction.
On the activity front, the latest India's PMI numbers showed some cooling after record highs, though they continue to point to a healthy expansion.
HSBC India Composite PMI slipped to 61.9 in September, down from August’s 63.2. Even so, this was still the second-highest in over two years, with factories leading growth. While new orders and overseas demand slowed, confidence remained upbeat, supported by capacity expansion and the recent cut in GST rates.
Manufacturing PMI came in at 58.5, slightly below August’s 17-and-a-half-year high of 59.3. Demand conditions stayed favourable, but competitive pressures capped growth. Only 3% of firms reported new hiring, while rising input costs pushed output charges to their fastest pace in over 12 years.
Services PMI moderated to 61.6 from 62.9, but the sector is still running close to peak levels. Foreign sales grew at their slowest since March, and hiring also softened, with only 5% of service providers adding jobs. On the bright side, both input and output inflation eased, signalling relief on cost pressures.
India’s foreign exchange reserves stood at USD 702.57 billion as of September 19, slipping marginally from USD 702.97 billion a week earlier. Reserves remain near record highs, just shy of the USD 704.89 billion peak in September 2024, and far above the long-term average of USD 308 billion. This provides India with a solid buffer against global uncertainties.
Overall, the Indian economy continues to show resilience. Infrastructure output is surging, manufacturing and services remain firmly in growth territory despite easing from record highs, and forex reserves are holding steady near historic peaks. While cost pressures and slower overseas demand are areas to watch, the broader picture suggests momentum remains strong heading into the festive season.
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