Private sector activity hits a record in August, services growth at all-time high

India's private sector activity hit a new high this month with the HSBC Flash India Composite PMI Output Index reaching 65.2, buoyed by a surge in new orders.

Service sector growth reached its highest level since the survey began in December 2005 at 65.5 in August, outperforming the manufacturing sector, according to the private survey released on Thursday.

The Composite Purchasing Managers Index (PMI) - a weighted average of comparable manufacturing and services indices - stood at 61.1 in July and 60.7 in August 2024.


"The services Flash PMI touched an all-time high, led by a sharp pick up in new business orders, both export and domestic," said Pranjul Bhandari, India chief economist at HSBC.

Manufacturing PMI improved to 59.8 in August from 59.1 in July, marking its highest reading since January 2008.

"The manufacturing Flash PMI rose further, inching closer to the 60-mark, led by a smart rise in new domestic orders," Bhandari said. However, growth of new export orders remained unchanged at July's levels, she added.

New international orders rose at the fastest pace since 2014, with survey respondents citing increased demand from customers across Asia, West Asia, Europe and the US.

On the employment front, the job growth rate exceeded the long-term average as faster hiring in services offset a slight slowdown among goods producers.

Inflationary pressures intensified across the private sector. Input costs increased due to higher wage bills, especially in services, and rising raw material prices.

Companies raised their charges at the fastest rate since February 2013.

"Margins improved as the rise in output prices was much faster than that for input costs," Bhandari noted.

Looking ahead, companies expect continued growth in business activity over the next 12 months, with optimism stronger among both manufacturing and service firms.

This positive outlook is supported by favourable demand prospects, according to anecdotal evidence.