India's August private sector growth recovers slightly from over four-year low, PMI shows
August marked a subtle rise in India's private sector activity, propelled by a rebound in services growth that countered the slowest factory expansion in five years. New orders showed a quicker pace but continued to be underwhelming against historical averages. The services sector's vigorous hiring led to a boost in employment, while business confidence for the future grew, albeit slightly.
India's private sector activity showed a slight improvement in August, marking a return from an over four-year low, according to a survey conducted by HSBC. The Composite Purchasing Managers' Index (PMI) for the private sector rose to 54.6 in August, up from July's 52-month low of 54.3, surpassing the Reuters poll median estimate of 54.3. While the PMI remained above the 50 threshold, separating growth from contraction, it still lagged behind the recent average of around 60.
New orders, a crucial indicator of demand, grew at a faster rate compared to previous months but remained weak in comparison to the long-term average. Manufacturers cited challenging market conditions, competitive pressures, and lower customer requirements as factors constraining their growth. However, export orders growth decelerated from July.
The services sector, the primary driver behind the rebound, significantly contributed to the month's recovery. The overall PMI climbed to 54.5 in August from a 53-month low of 53.3 in July. In contrast, the manufacturing PMI declined for the third consecutive month to 52.9, its lowest level since August 2021. Both goods output and new orders experienced their weakest pace in five years.
Furthermore, staffing within the manufacturing sector fell for the first time in 2-1/2 years. Nevertheless, overall employment surged to its joint-fastest pace since June 2025, thanks to a 15-month-high growth in the services sector. Despite a seven-month low in overall input cost pressures, companies raised their selling prices at the fastest rate since April to offset the increased costs.
Business confidence for the year ahead also rose in August, although the level of optimism was comparatively modest when compared to early 2026.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
