India’s Private Sector Recovers in August, Services Drive Growth

India’s private sector activity showed a modest improvement in August, recovering from an over four-year low recorded in July. This rebound was primarily driven by the services sector, which counteracted the slowest rise in manufacturing output in five years.

Key PMI Figures for August

• The HSBC Flash India Composite Purchasing Managers’ Index (PMI) increased to 54.6 in August from 54.3 in July.
• The Flash Services PMI rose to 54.5 in August, up from 53.3 in July.
• The Manufacturing PMI declined to a five-year low of 52.9, down from 53.5 in July.

The services sector experienced a notable re-acceleration in August, showing strengthened growth rates in both business activity and new work. This follows a 53-month low recorded in the sector during July.

Manufacturing’s Momentum Loss

In stark contrast, the manufacturing sector lost significant momentum, registering the weakest rises in production and new orders in five years. Firms attributed this slowdown to challenging market conditions, intense competitive pressures, and reduced customer demand.

Despite the domestic manufacturing challenges, export orders across the private sector saw a solid increase during August. However, the overall pace of expansion for international demand eased in both the manufacturing and services segments.

Employment Growth and Pricing Trends

A significant development in August was the surge in employment across the Indian private sector, reaching the joint-fastest rate since June 2025, alongside April 2026. This job creation was predominantly concentrated within the service economy, driven by the necessity to meet rising demand.

• Manufacturing staffing levels saw a decrease for the first time in two-and-a-half years.
• Indian companies passed on increased costs to customers, leading to the fastest rise in prices charged since April.
• Input cost inflation, however, was at its slowest in seven months.
• Firms cited higher costs for electricity, raw materials like steel, transport, and technology as reasons for price increases.

Both manufacturing and service firms reported a faster increase in their selling prices compared to the preceding month. Looking ahead, business expectations for the coming year improved in August, reflecting a general optimism among companies for better market conditions.