India’s Private Sector Logs Fastest Growth Since 2005, PMI Hits Record High

New Delhi, Aug 21 (KNN) India's private sector economy achieved its fastest growth rate since data collection began in December 2005, according to new survey findings released Thursday by S&P Global. 

The HSBC Flash India Composite PMI Output Index surged to 65.2 in August, marking a substantial increase of over four points from July's reading of 61.1.

The services sector led this exceptional performance, with the HSBC Flash India Services PMI Business Activity Index reaching an all-time high of 65.6, compared to 60.5 in the previous month. 

This surge was primarily driven by a sharp increase in new business orders from both domestic and international markets. 

Meanwhile, the manufacturing sector also demonstrated robust growth, with the HSBC Flash India Manufacturing PMI climbing to 59.8 from 59.1 in July, representing the highest reading since January 2008 and signaling improved factory operating conditions.

Pranjul Bhandari, Chief India Economist, HSBC, attributed the strong performance to accelerating demand across sectors. Manufacturing showed particular strength in domestic orders, while export order growth remained stable at July levels. 

The economist noted that profit margins improved as companies were able to increase output prices at a faster rate than their input costs.

Export performance reached notable milestones during August, with new export orders growing at the fastest pace since composite data collection commenced in 2014. 

The expansion was supported by increased demand from multiple regions, including Asia, the Middle East, Europe, and the United States, demonstrating broad-based international appeal for Indian goods and services.

Employment trends continued their positive trajectory for the 27th consecutive month, with overall job creation accelerating in August. 

The services sector drove this employment growth, compensating for a slight deceleration in manufacturing hiring. Despite increased business volumes, backlogs of work rose only marginally, marking the slowest increase since May as companies successfully expanded their workforce capacity to meet demand.

Inflationary pressures became more pronounced during the month, with input costs rising due to higher wage bills, particularly within the services sector, and elevated raw material prices. 

Companies responded by raising output charges at the sharpest pace in 12.5 years, enabled by strong demand conditions that allowed them to successfully pass increased costs onto customers.

Business confidence strengthened significantly, with private sector firms reporting their most optimistic outlook since March. 

Both manufacturing and services companies cited robust demand expectations as the primary factor driving positive sentiment for the year ahead, suggesting sustained momentum in India's economic expansion.

(KNN Bureau)