India's private sector activity expanded at a slightly faster pace in August, led by a rebound in services, while manufacturing growth weakened to its slowest in five years, a HSBC survey showed.
The HSBC Flash India Composite Purchasing Managers' Index (PMI) Output Index increased to 54.6 from 54.3 in July, marking a modest acceleration after the prior month's reading marked the second-weakest since March 2022. The services sector's business activity index climbed to 54.5 from 53.3, while the manufacturing output index fell to 54.9 from 56.4, the weakest expansion in five years.
The HSBC Flash India Manufacturing PMI declined to 52.9 from 53.5, extending a three-month streak of deceleration and representing the softest improvement in overall factory conditions since early 2021. Input cost inflation eased to its slowest pace in seven months, though companies continued to face higher expenses for electricity, raw materials—including steel—transport, and technology.
Private sector employment rose at the joint-fastest rate since June 2025, with job gains concentrated in services, while manufacturing staffing levels contracted for the first time in two and a half years. Outstanding business decreased at the steepest rate in five years as service providers worked through backlogs.
Export orders increased solidly across the private sector, supported by stronger demand from the United States, Germany, China, Singapore, and Japan, though the pace of growth slowed in both manufacturing and services. Despite slower input purchasing, inventories of finished goods remained elevated, indicating persistent supply chain adjustments.
"Overall private sector output growth was broadly steady, helped by stronger services activity," said Pranjul Bhandari, Chief India Economist at HSBC. "Manufacturing growth weakened further in August, marking the softest improvement in five years. Output and new orders still rose, but at a slower pace."
