Services drive recovery in private sector activity in Aug: Flash PMI

The HSBC flash composite PMI rose to 54.6 from 54.3 in July, with stronger services offsetting manufacturing growth that slowed to its weakest pace in five years

India’s private sector business activity recovered marginally in August after hitting a four-year low in July, with stronger services activity offsetting a further slowdown in manufacturing, according to HSBC’s flash Purchasing Managers’ Index (PMI) survey released on Friday.

 

Compiled by S&P Global, the index rose to 54.6 from 54.3 in July, which was the lowest since early 2022. It remained above the 50 mark separating expansion from contraction for the 61st consecutive month. However, the August reading was still the second weakest since March 2022.

 

Growth in new orders improved in August but remained subdued compared with the trend in recent years, while export growth slowed across both sectors, the survey said.

 

 

“The improved rate of expansion in August was centred on the service sector which, after recording the softest upturns in business activity and new work for 53 months in July, staged a modest re-acceleration as growth rates strengthened. By contrast, the manufacturing sector lost momentum in August, posting the weakest rises in production and new orders in exactly five years,” S&P Global said. 

   

The HSBC Flash India Manufacturing PMI fell to 52.9 in August from 53.5 in July, its lowest since August 2021. The Flash India Services PMI Business Activity Index, however, rose to 54.5 from 53.3.

 

“Overall private sector output growth was broadly steady, helped by stronger services activity. Manufacturing growth weakened further in August, marking the softest improvement in five years. Output and new orders still rose, but at a slower pace,” said Pranjul Bhandari, chief India economist at HSBC.

 

Overall employment generation improved in August, led by services, as businesses hired workers to meet rising demand. The pace of job creation accelerated to one of the quickest since June 2025, even as manufacturing employment fell. Staffing levels in manufacturing declined for the first time in two-and-a-half years, the survey said.

 

Input costs continued to rise, with firms reporting higher expenses for electricity, raw materials, particularly steel, transport and technology. However, input cost inflation eased to a seven-month low after months of elevated pressures following the West Asia conflict.

 

Prices charged for final goods and services, meanwhile, rose at the fastest pace since April, as businesses stepped up efforts to pass higher costs on to customers.

 

“Charge inflation moved in the opposite direction in August, with both manufacturing and services recording faster increases in selling prices than in the previous survey period,” S&P said.

 

“Stock of finished goods remained high even though input buying slowed. Cost pressures eased, but firms raised selling prices faster, pointing to stronger pass-through,” Bhandari added.

 

The flash PMI provides an early indication of the final manufacturing, services and composite PMI readings and is based on around 90 per cent of monthly survey responses. Final PMI data for manufacturing will be released on September 1 and for services on September 3.