India’s Private Sector Grows: Services Boom, Manufacturing Slows

India’s private sector saw a marginal boost in August, primarily driven by a stronger services industry. This recovery helped to counteract a significant slowdown in manufacturing activity across the country.

The HSBC Flash India Composite PMI, which measures economic health, edged up to 54.6 in August from 54.3 in July, showing continued expansion. However, this overall growth hides mixed performance between key sectors.

Services Surge, Manufacturing Stumbles

• Services activity climbed to a 53-month high, with its PMI reaching 54.5 in August.
• Manufacturing growth dropped for the third month in a row, with its PMI falling to 52.9, its lowest since August 2021.
• Output and new orders for manufacturing saw their slowest growth in five years.

Demand for manufactured goods faced pressure due to tough market conditions, increased competition, and lower customer needs. This also impacted the growth of export orders for factory products.

Employment and Price Trends

• Factory employment decreased for the first time in two and a half years.
• Services hiring, however, reached a 15-month high, boosting overall employment figures.
• Cost pressures eased, with input-price growth hitting a seven-month low.
• Companies still raised selling prices to cover their higher operational costs.

Business confidence for the next year improved slightly in August, though it remained below earlier 2026 levels. The data clearly shows India’s private sector is expanding, but it relies heavily on services to balance out weaker manufacturing.