HSBC Flash India PMI® News Release
The HSBC Flash India PMI data for August 2026 showed a marginally stronger expansion in output across India's private sector economy, with the Composite PMI Output Index rising to 54.6 from July's 52-month low of 54.3. Although this represented the second-weakest expansion since March 2022, it indicated continued growth in private sector activity.
The performance was characterized by significant sectoral divergence. The service sector strengthened considerably, with the Services PMI Business Activity Index improving to 54.5 from July's 53-month low of 53.3. In contrast, the manufacturing sector lost momentum, with the Manufacturing PMI Output Index declining to 54.9 from 56.4 in July, marking the weakest rise in production in exactly five years. The headline Manufacturing PMI dropped for the third consecutive month to 52.9 from July's final reading of 53.5, signaling a historically soft improvement in overall factory conditions.
New order volumes increased slightly stronger in August, though the pace remained subdued compared to recent trends. Companies reported challenging market conditions, competitive pressures, and lower customer requirements as factors limiting growth. Export orders increased solidly across both sectors, with companies citing stronger demand from diverse markets including the US, Germany, China, Singapore, and Japan, though the rate of expansion eased from previous levels.
A standout feature was the strong employment growth, with private sector job creation accelerating to the joint-fastest rate since June 2025 (alongside April 2026). This employment upturn was centered on the service economy, while manufacturing staffing levels decreased for the first time in two-and-a-half years. The hiring gains allowed service sector companies to clear backlogs of work, with outstanding business decreasing at the steepest rate in five years at the composite level.
On the price front, input costs increased solidly but at the softest pace in seven months, with companies citing expenses for electricity, raw materials (particularly steel), transport, and technology. Despite this moderation in input cost pressures, output charge inflation accelerated to the strongest rate since April, with both manufacturing and services recording faster increases in selling prices as companies made increased efforts to pass through costs to customers.
Business expectations for the coming year edged higher in August, reflecting improved optimism among companies that market conditions would improve. The degree of positivity improved from July across both manufacturing and services sectors.