New Delhi: India’s private sector growth appears set to pick up moderately in August after slowing to a more than four-year low in July, according to preliminary data from the HSBC Flash India Purchasing Managers’ Index (PMI) released on Friday.
The HSBC Flash India Composite PMI Output Index rose to 54.6 in August from July’s 52-month low of 54.3, signalling a modest improvement in private-sector activity, the survey compiled by S&P Global showed.
The flash reading pointed to a quicker upturn in services, while manufacturing growth remained subdued. The services index is estimated at 54.5 in August against 53.3 in July. However, the manufacturing PMI output index for the month is estimated to contract sharply from 56.4 in July to 54.9 in August.
The reading, which is an advance estimate for the month based on 75-85% of the total monthly survey replies, still signalled likely second-weakest expansion since March 2022, with stronger services activity more than offsetting the weakest rise in manufacturing output in five years.
The flash survey indicated that new orders and output increased at a slightly faster pace in August, although growth remained subdued compared with the trend of recent years. Anecdotal evidence indicated that challenging market conditions, competitive pressures and lower customer requirements often stymied growth, according to the survey.
Export orders rose solidly across the private sector thus far in August, albeit with the rate of expansion easing across both manufacturing and services. Companies pointed to stronger orders from a diverse range of export markets including the US, Germany, China, Singapore and Japan.
“Overall private sector output growth was broadly steady, helped by stronger services activity,” said Pranjul Bhandari, chief India economist at HSBC. “Manufacturing growth weakened further in August, marking the softest improvement in five years. Output and new orders still rose, but at a slower pace. Stock of finished goods remained high even though input buying slowed. Cost pressures eased, but firms raised selling prices faster, pointing to stronger pass-through.”
A standout feature of the August flash data was a strong increase in employment. The rate of job creation accelerated to the joint-fastest since June 2025, alongside April 2026, as businesses commented on a need to hire workers to meet rising demand.
This upturn was centred on the service economy, whereas staffing levels in manufacturing decreased for the first time in two-and-a-half years. Hiring gains at service sector companies allowed them to continue clearing backlogs.
At the composite level, outstanding business decreased at the steepest rate in five years, albeit modestly overall. Input costs increased in August, with expenses often rising for key inputs such as electricity, raw materials (particularly steel), transport and technology, the survey said.
Following a period of heightened inflation, the latest rise in overall costs was the softest in seven months, it added. Charge inflation moved in the opposite direction in August, with both manufacturing and services recording faster increases in selling prices than in the previous survey period. The overall uplift was the strongest observed since April, with respondents often highlighting increased efforts to pass through costs to customers.
Business expectations for the coming year edged higher in August from July, reflecting hopes that market conditions would improve across both manufacturing and services.
Manufacturing-only flash data indicated greater purchasing activity in August, which broadly reflected an increase in total new order volumes. That said, the pace of expansion in input purchases was the slowest recorded in more than five years, which in turn contributed to softer rates of accumulation of both pre- and post-production inventories.
The HSBC Flash India PMI is compiled by S&P Global from responses to questionnaires sent to about 400 manufacturers and 400 service providers. The survey panels are each stratified by detailed sector and company workforce size, based on contributions to GDP. The services sector is defined by S&P Global as consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.
Subhash is the infrastructure editor at Mint and tracks the momentous developments taking place in the space that is fast changing the Indian landscape. He finds reporting to be a passion that provides the necessary adrenaline rush and keeps you going.
