India flash PMI surges to 65.2 in August on record services, mfg growth

Services led the growth, with activity hitting a record 65.6, while manufacturing preliminary PMI climbed to 59.8 in August, its strongest level since January 2008

India’s private sector economy recorded its fastest growth since the start of survey data in December 2005, with the headline HSBC Flash India Composite PMI Output Index rising over four points to 65.2 from 61.1 in July, according to S&P Global on Thursday. 

Pranjul Bhandari, Chief India Economist at HSBC, said, "The Services flash PMI touched an all-time high of 65.6, led by a sharp pick up in new business orders, both export and domestic. The Manufacturing flash PMI rose  further, inching closer to the 60-mark, led by a smart rise in new domestic orders. Growth of new export orders, however, remained unchanged at July’s levels. Margins improved as the rise in output prices was much faster than that for input costs."

Manufacturing and services surge in August

Both manufacturing and services sectors reported accelerated growth, with services outperforming and registering a fresh survey high in business activity. The services sector spearheaded this growth with HSBC Flash India Services PMI Business Activity Index soaring to a survey high of 65.6 from 60.5 in the last month.  

 

The HSBC Flash India Manufacturing PMI rose to 59.8 in August from 59.1 in July, its highest reading since January 2008, signalling faster improvement in factory operating conditions.

Demand and exports

Demand conditions strengthened further, with both goods producers and service providers recording sharp increases in new business. Export orders grew at the fastest pace since composite data collection began in 2014, supported by stronger inflows from Asia, the Middle East, Europe and the US.

Employment trends in August

Hiring activity continued for the 27th straight month. Overall job creation quickened in August, driven by stronger employment growth in services, which offset a marginal slowdown in manufacturing. Backlogs of work rose only slightly, the slowest increase since May, as firms expanded workforce capacity. 

Pricing pressures rise

Inflationary pressures intensified, with input costs rising due to higher wage bills, particularly in services, and elevated raw material prices. Output charges were raised at the sharpest pace in 12-and-a-half years, as firms reported that buoyant demand allowed them to pass on higher costs.

Outlook for business

Confidence strengthened, with private sector firms reporting their most optimistic outlook since March. Both manufacturers and service providers cited robust demand expectations as the key driver of positive sentiment for the year ahead.