India’s private sector business activity recovered marginally in August after falling to a four-year low in July, with growth in the services sector offsetting a slower rise in manufacturing activity, 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 a final reading of 54.3 in July, which was the lowest since early 2022. The index remained above the 50 mark, which separates expansion from contraction, for the 61st consecutive month. However, the August reading was still the second weakest since March 2022.
While growth in new order volumes improved in August, the pace remained low compared with the trend in recent years, 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 from 53.5 in July, while the Flash India Services PMI Business Activity Index rose to 54.5 from 53.3 in July.
Led by the services sector, overall job creation improved in August as businesses hired workers to meet rising demand, the survey said.
“This upturn was centred on the service economy, whereas staffing levels in manufacturing decreased for the first time in two-and-a-half years,” the survey said.
Input costs grew at the softest pace in seven months, while final prices rose at a faster pace. Respondents highlighted increased efforts to pass on costs to customers, the survey said.
“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. 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,” said Pranjul Bhandari, chief India economist at HSBC.
