The private sector performance of India in August increased a little faster than in July, when a low was recorded for 52 months. An improvement in the services sector indicators offset a weakening in manufacturing activity, according to preliminary PMI index data published today.
The HSBC Flash India Composite PMI Output Index rose to 54.6 in August from 54.3 in July, becoming the second-weakest reading since March 2022. The index reflects the month-to-month change in total output across India’s manufacturing and services sectors.
The business activity index in the services sector rose to 54.5 from 53.3 in July, while the manufacturing output index fell to 54.9 from 56.4, recording the slowest growth in industrial production in five years.
The preliminary HSBC Flash India Manufacturing PMI fell to 52.9 in August from 53.5 in July, marking a third consecutive month of decline and the weakest improvement in overall factory conditions in more than five years.
The volume of new orders in August increased slightly faster, but growth remained subdued. Companies cited difficult market conditions, competitive pressure, and lower client demand as factors holding back business expansion.
Export orders in the private sector grew steadily: companies reported stronger demand from the United States, Germany, China, Singapore and Japan. However, export growth rates slowed in both manufacturing and services.
Employment in India’s private sector increased at one of the fastest rates since June 2025, matching the level from April 2026. Job creation was concentrated in the services sector, while headcount in the manufacturing industry fell for the first time in two and a half years.
Cost inflation slowed to a seven-month low, although spending on electricity, raw materials (including steel), transportation and technology continued to rise. Companies raised their selling prices at the fastest pace since April, seeking to pass costs on to consumers.
Backlogged orders fell most sharply in five years as service-sector firms cleared accumulated arrears.
Pranjul Bhandari, HSBC’s chief economist for India, noted: “Overall, private-sector productivity growth remained relatively stable thanks to increased activity in the services sector. Manufacturing output growth in August continued to slow, recording the weakest improvement in five years. Output and new orders continued to rise, but at slower rates. Finished goods inventories remained high despite a slowdown in raw material purchasing. Price pressures eased, however companies raised their selling prices faster, indicating stronger cost pass-through to consumers.”
Business expectations for the coming year improved compared with July in both the manufacturing sector and the services sector.