India services activity expands in August, but growth remains near four-year low

In August, India's services activity experienced a modest expansion, bolstered by heightened new business and robust demand, according to a private survey published on Thursday. Nonetheless, the growth rate remained lackluster, marking the economy's second weakest expansion since March 2022. The HSBC India Services Business Activity Index climbed to 54.1 in August from 53.3 in July, yet it remained below the 62.9 recorded in August 2025.

A reading above 50 signifies growth, while a figure below indicates contraction. Pranjul Bhandari, HSBC's chief India economist, noted that growth was primarily driven by heightened output and new business, but the pace remained among the weakest in over four years. Some firms attributed this to subdued bookings, heightened competition, and diminished transport operations, according to Bhandari.

Manufacturing activity, on the other hand, weakened in August, with the Purchasing Managers' Index (PMI) plunging to a five-year low of 52.8 from 53.5 in July. Consequently, the composite PMI, which blends manufacturing and services activity, remained flat at 54.3 in August. Despite stronger services activity offsetting the slowdown in manufacturing, overall private sector growth remained unchanged during the month.

Business confidence regarding the forthcoming year remained broadly unchanged from July and stayed below its long-run average, as per the survey. Service providers continued to anticipate enhancements in market conditions and demand, with technology adoption and new inquiries also fueling optimism.