NEW DELHI — India’s private sector output experienced a modest uptick in August, rebounding from an over four-year low registered in July. The expansion was largely propelled by a recovery across the services industry, which helped cushion a further slowdown in manufacturing production, according to survey data compiled by S&P Global for HSBC.

The flash HSBC India Composite Output Index edged up to 54.6 in August from 54.3 in July. While the headline index maintained its position comfortably above the 50.0 threshold separating growth from contraction for the 61st consecutive month, the August figure remains the second-softest expansion recorded by the survey since March 2022.

Sectoral Breakdown and Demand Dynamics

The improvement in private sector momentum was driven primarily by services, where business activity climbed to a index reading of 54.5 in August following a 53-month low of 53.3 in July. Both domestic business volume and new order intakes across services recorded a modest re-acceleration after previous mid-summer lulls.

Conversely, India’s manufacturing trajectory cooled further, marking its lowest expansion rate in five years. The HSBC Flash India Manufacturing PMI fell for a third straight month to 52.9, down from 53.5 in July. Goods producers cited softer demand, tighter market conditions, and growing competitive pressures as factors tempering operational output.

International demand remained a key driver across both sectors. Indian firms logged solid gains in new export business, pointing to strong client interest across key international hubs including the United States, Germany, Japan, Singapore, and China, even as total export growth rates moderated slightly from July levels.

Employment Acceleration and Pricing Pressures

Labor market conditions delivered a strong positive signal during the survey period. Aggregate job creation across the private sector accelerated to match its joint-fastest pace since June 2025. Recruitment drives were concentrated heavily within services firms seeking to clear capacity backlogs, whereas manufacturing staffing levels contracted slightly for the first time in two and a half years.

Inflation dynamics showed a distinct divergence between input and output prices:

  • Cost Pressures Ease: Input cost inflation decelerated to its softest level in seven months, despite persistent price increases for electricity, freight transport, technology, and basic metals like steel.

  • Selling Prices Rise: Average selling prices jumped at their fastest rate since April. Companies reported increased success in passing accumulated operational overheads along to end consumers.

Commenting on the August findings, Pranjul Bhandari, Chief India Economist at HSBC, noted that overall private sector performance remained broadly steady.

Despite persistent manufacturing headwinds, business confidence regarding the 12-month outlook picked up from July, driven by expectations of strengthening market demand and ongoing product innovations across both goods and service sectors.