Growth in India’s private sector activity improved slightly in August after falling to an over four-year low in July, S&P Global said on Friday. A recovery in services sector growth offset the slowest rise in manufacturing output in five years.
The HSBC Flash India Composite Purchasing Managers’ Index (PMI) rose to 54.6 in August from 54.3 in July. Despite the improvement, the latest reading was the second-weakest since March 2022.
“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,” S&P Global, which compiles the PMI, said. “By contrast, the manufacturing sector lost momentum in August, posting the weakest rises in production and new orders in exactly five years.”
Services Growth Outpaces
The Flash Services PMI rose to 54.5 in August from 53.3 in July, while manufacturing PMI fell to a five-year low of 52.9 from 53.5 in July.
“Anecdotal evidence indicated that challenging market conditions, competitive pressures and lower customer requirements often stymied growth,” S&P Global said.
Export orders increased at a solid pace across the private sector in August, although the pace of expansion eased in both manufacturing and services. Firms surveyed by S&P Global reported stronger orders from the US, Germany, China, Singapore and Japan.
“A standout feature of the August flash data was a strong increase in employment across the Indian private sector economy. The rate of job creation accelerated to the joint-fastest since June 2025 (alongside April 2026), as businesses commented on a need to hire workers to meet rising demand,” S&P Global said.
Job creation picked up mainly in the service economy, whereas staffing levels in manufacturing decreased for the first time in two-and-a-half years.
On the price front, Indian companies passed on costs to customers in August. Prices charged by companies rose at the fastest rate since April, despite the slowest rise in input cost inflation in seven months.
Firms reported higher input costs for electricity, raw materials such as steel, transport, and technology. Both manufacturing and service firms recorded a faster rise in selling prices than in the previous month.
Business expectations for the coming year edged higher in August, reflecting hopes among companies that market conditions would improve, S&P Global said.