HSBC Flash India PMI®
The HSBC Flash India PMI data for July 2026 shows a significant moderation in private sector growth alongside intensifying inflationary pressures. The HSBC Flash India Composite PMI Output Index declined to 54.3 in July from 57.1 in June, indicating the slowest pace of expansion in private sector activity since March 2022. This slowdown was attributed to increasingly challenging market conditions, competitive pressures, order cancellations, reduced client enquiries, and shortages of key raw materials.
New orders rose at the weakest pace in close to four-and-a-half years, showing only moderate growth by historical standards. The moderation was particularly centered on India's service economy, where the Services PMI Business Activity Index dropped to 53.1 from 57.4 in June, representing the weakest expansion in 53 months. In contrast, the manufacturing sector showed some recovery with the Manufacturing PMI Output Index improving to 57.0 from 56.3 in June, though the overall Manufacturing PMI declined slightly to 53.9 from 54.2.
A notable positive development was the strengthening of new export orders, which rose at the most pronounced pace since March. Manufacturing firms showed particularly strong export performance, with their index rising by nearly four points. Both sectors aligned in pricing decisions, with output charge inflation gathering pace to reach the fastest rate since April, driven by ongoing cost increases. Input costs across the private sector increased at a quicker rate than in June, though remaining below the long-run average, with survey participants citing fuel, labour, materials, and transportation as contributing factors.
Private sector employment continued to rise for the seventh consecutive month, with service providers outperforming manufacturers in job creation. Despite this hiring activity, signs of spare capacity emerged as outstanding business volumes decreased at the composite level for the first time in three months. Business confidence retreated to a six-month low during July, falling further below its long-run average, with optimism strengthening at manufacturing firms but weakening across services.
According to Pranjul Bhandari, Chief India Economist at HSBC, renewed tensions in the Middle East have led firms to build buffers to manage uncertainties around supply-side shocks, resulting in increased finished goods and input inventories alongside a pick-up in purchasing volumes. The data was collected from 8-21 July 2026 from survey panels of approximately 400 manufacturers and 400 service providers, representing about 80-90% of total responses.