India's Private Sector Activity Rises Marginally In August As Services Recover: HSBC PMI

New Delhi, Aug 21 (KNN) India's private sector activity expanded at a slightly faster pace in August, supported by an improvement in services activity, even as manufacturing growth slowed to its weakest level in five years, according to the HSBC Flash India PMI.

The HSBC Flash India PMI Composite Output Index rose to 54.6 in August from 54.3 in July, which was a 52-month low. However, the latest reading remained the second-weakest since March 2022, indicating subdued overall growth.

Services Growth Recovers, Manufacturing Slows

The improvement was led by services, which saw a modest recovery in business activity and new orders after hitting 53-month lows in July.

Manufacturing weakened further, with production and new orders growing at their slowest pace in five years. The HSBC Flash India Manufacturing PMI fell for a third month to 52.9 in August, as firms cited tough market conditions, competition and weaker demand.

Private-sector export orders continued to rise, though growth slowed across both sectors. Stronger demand was reported from the US, Germany, China, Singapore and Japan.

Private Sector Hiring Accelerates

Employment was a key positive in August, with private-sector job creation accelerating to its joint-fastest pace since June 2025, matching April 2026 levels.

Service-sector hiring drove the increase and helped reduce backlogs, which fell at the fastest pace in five years. However, manufacturing employment declined for the first time in two-and-a-half years.

Input Cost Pressures Ease, Selling Prices Rise

Indian companies faced higher input costs in August, particularly for electricity, steel, transport and technology, though overall cost inflation eased to a seven-month low.

Selling prices rose faster despite softer cost pressures, with composite output charge inflation reaching its highest level since April. HSBC Chief India Economist Pranjul Bhandari said stronger services activity supported growth, while manufacturing weakened further.

Business Sentiment Improves

Business confidence improved marginally in August, with optimism rising across manufacturing and services on expectations of better market conditions.

Manufacturers increased purchases broadly in line with new orders, but input buying slowed to its weakest pace in over five years, limiting inventory growth. 

Overall, the PMI pointed to modest private-sector improvement, though weak manufacturing and subdued new orders indicate an uneven recovery.

(KNN Bureau)