India PMI rises to 54.6 in August as services rebound lifts private sector
Synopsis
India's composite PMI nudged up to 54.6 in August, but the headline masks a split economy: services bounced back after a 53-month low, while manufacturing slipped to its weakest expansion in five years. Job creation hit a joint-fastest pace since June 2025 — yet firms are raising selling prices at the steepest rate since April, squeezing the consumer even as the growth dial ticks higher.
Key Takeaways
HSBC Flash India Composite PMI rose to 54.6 in August from 54.3 in July.
Services sector rebounded after recording its weakest growth in 53 months in July.
Manufacturing PMI eased to 52.9 — its softest expansion in five years .
Private-sector job creation accelerated to its joint-fastest pace since June 2025 , driven by services.
Input cost inflation hit a seven-month low , but selling price inflation reached its strongest since April .
Business optimism for the year ahead improved across both manufacturing and services.
India's private sector output expanded at a slightly faster pace in August, with the HSBC Flash India Composite PMI Output Index climbing to 54.6 from 54.3 in July, according to data released on Friday, 21 August. The uptick was driven primarily by a rebound in services activity, even as manufacturing growth softened to a five-year low.
Services Sector Leads the Recovery
The services sector was the standout performer in August, recording a modest re-acceleration in both business activity and new work intake after logging its weakest growth in 53 months in July. The rebound helped stabilise the composite reading and offset a deceleration on the manufacturing side.
Employment trends also pointed positive, with private-sector job creation accelerating to its joint-fastest pace since June 2025. The increase was concentrated in the services segment, signalling that hiring momentum remains intact even as output growth stays measured.
Manufacturing Expansion Slows to Five-Year Low
The HSBC Flash India Manufacturing PMI came in at 52.9 in August — still above the 50-point expansion threshold, but at its softest level in five years. Output and new orders continued to grow, though at a slower pace than in preceding months.
Pranjul Bhandari, Chief India Economist at HSBC, noted that overall private sector output growth was 'broadly steady, helped by stronger services activity.' She added: 'Manufacturing growth weakened further in August, marking the softest improvement in five years. Output and new orders still rose, but at a slower pace.'
New Orders and Export Demand
Indian companies reported a slightly stronger increase in new orders during August, with export orders continuing to rise solidly across the private sector. Demand was supported by markets including the US, Germany, China, Singapore, and Japan, although export growth moderated across both manufacturing and services.
Purchasing activity in the manufacturing sector increased broadly in line with higher new order volumes, suggesting firms were restocking inputs in anticipation of sustained demand.
Inflation and Business Outlook
Input cost pressures eased further in August, with overall cost inflation reaching its softest level in seven months. However, firms raised selling prices at a faster pace, with charge inflation hitting its strongest level since April, as companies sought to pass on residual cost increases to customers.
Business expectations for the year ahead improved from July, with sentiment strengthening across both manufacturing and services — indicating greater optimism that market conditions would firm up in the coming months.
Point of View
But the internals tell a more complicated story. Manufacturing at a five-year expansion low is a warning sign for an economy that has repeatedly targeted a higher share of industrial output in GDP — and repeatedly missed. The services rebound is welcome, but services-led growth alone cannot absorb India's labour surplus at the scale needed. The pricing dynamic is also worth watching: input costs are easing, yet firms are accelerating selling price increases — pointing to margin-rebuilding behaviour rather than demand strength. If that feeds into retail inflation, it complicates the Reserve Bank of India's rate calculus heading into the second half of the financial year.
NationPress
21 Aug 2026
Frequently Asked Questions
What is the HSBC Flash India Composite PMI and what did it show in August?
The HSBC Flash India Composite PMI Output Index is a monthly survey-based measure of private sector business activity in India, covering both manufacturing and services. It rose to 54.6 in August from 54.3 in July, indicating a slight acceleration in overall output growth, with any reading above 50 signalling expansion.
Why did India's manufacturing PMI slow in August?
The HSBC Flash India Manufacturing PMI fell to 52.9 in August, its softest expansion in five years, as both output and new order growth moderated. While the sector remained in expansion territory, the pace of improvement was the weakest since the same period five years ago.
Which export markets drove demand for Indian firms in August?
Indian private sector firms reported solid export order growth in August, with demand coming from markets including the US, Germany, China, Singapore, and Japan. However, export growth moderated across both manufacturing and services compared with prior months.
How did employment trends look in August's PMI survey?
Private-sector job creation accelerated to its joint-fastest pace since June 2025, according to the HSBC Flash PMI data. The increase was driven primarily by the services sector, reflecting continued hiring momentum despite the moderation in manufacturing growth.
What does the August PMI data mean for inflation in India?
Input cost pressures eased to a seven-month low in August, but firms raised selling prices at the fastest pace since April, suggesting companies are rebuilding margins by passing costs on to customers. This divergence between input and output price inflation is a factor the Reserve Bank of India is likely to monitor closely.
