India sees record expansion in private sector business activity in August

The HSBC Flash India Composite Output Index rose by over four points in August to 65.2, from 61.1 in July, signaling a rapid expansion in private sector business activity that was the quickest on record.

The rapid upturn in business activity was driven by a surge in sales volumes, with total new order intakes rising at one of the quickest rates on record. Hiring picked up, with jobs growth accelerating, while firms also registered their most optimistic assessment of the year-ahead outlook since March.

The latest survey data also revealed a strong degree of pricing power among companies as the rate of output charge inflation jumped to a 12-and-a-half-year high.

Sub-sector data revealed broad-based strength across India's economy as growth in both manufacturing and services output accelerated. Services was the better performer of the two, with its expansion in business activity hitting a fresh survey high.

The HSBC Flash India Manufacturing PMI ticked up to 59.8 in August, from 59.1 in July, indicating a faster improvement in factory operating conditions across India. In fact, the index registered its highest reading since January 2008.

There was considerable strength in demand for Indian goods and services in August. Both manufacturers and service providers saw new order intakes rise at sharp and accelerated rates on the month, underpinning a near survey-record overall expansion. Export markets supported August's uplift in overall new business, underlying survey data showed.

As has been the case on a monthly basis since June 2022, private sector companies in India bolstered their workforce capacity in August. As for pricing trends, the latest survey data indicated an intensification of inflationary pressures across India's private sector.

Looking ahead, private sector companies in India anticipated further growth in business activity over the next 12 months.

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