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

India’s private sector business activity experienced a marginal recovery in August 2026, primarily driven by the services sector’s renewed growth. This upturn aligns with the latest data from HSBC’s flash Purchasing Managers’ Index (PMI) survey, indicating continued economic expansion.

Key Economic Indicators for August

• The composite PMI for India rose to 54.6 in August, up from 54.3 recorded in July.
• This marks the 61st consecutive month of expansion across the private sector.
• However, the August reading represents the second weakest growth rate observed since March 2022.

Services Sector Fuels Growth

The services sector emerged as the primary catalyst for this marginal recovery, demonstrating a modest re-acceleration in its growth trajectory. The Business Activity Index for services climbed to 54.5 in August, an increase from 53.3 in July, following a period of softer upturn.

Manufacturing Faces Downturn

In contrast to the services sector, India’s manufacturing activity experienced a notable loss of momentum during August. The manufacturing PMI decreased to 52.9 from 53.5, indicating a significant slowdown in the sector.

• This decline signifies the weakest rises in both production and new orders witnessed over the past five years.
• Additionally, manufacturing staffing levels saw a reduction for the first time in two and a half years.

Employment and Cost Dynamics

Despite the mixed sectoral performance, overall job creation within the private sector improved during August. This positive trend was largely driven by the services sector, which increased hiring efforts to accommodate rising demand for its offerings.

Regarding inflationary pressures, input costs grew at their softest pace in seven months, suggesting some moderation in cost pressures for businesses. However, firms responded by accelerating the rate at which they raised final prices, indicating a continued strategy to pass these costs onto consumers.