India's private sector shows resilience on the back of robust business growth, job creation: HSBC PMI report

The latest HSBC Flash India PMI (Purchasing Managers’ Index) report indicated strong output from India’s private sector for the 37th consecutive month in August. 

The report showed that the Composite PMI Output Index recorded an impressive 60.5, marking the 37th consecutive month of expansion. The latest HSBC flash PMI survey, compiled by S&P Global, also highlighted a sharp upturn in new business intakes, solid job creation and upbeat expectations towards growth prospects. On the price front, there were softer increases in both input costs and selling prices. 

This sustained growth reflects strong demand across various sectors, despite a slight dip in manufacturing activity. 

The headline HSBC Flash India Composite Output Index is a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors.

“Output Index -stood at 60.5 in August, little changed from 60.7 in July and pointing to a sharp rate of expansion that was above its long-run trend level (54.6),” said the report. 

The Manufacturing PMI fell to 57.9, down from previous highs, signalling a moderation in growth. However, the services sector continued to thrive, with the Services PMI rising to 60.4. This highlights the ongoing recovery in the services industry, which has been a significant driver of economic activity post Covid-19 pandemic. 

The index also highlighted that the new business inflows remained robust, contributing to the overall positive sentiment in the private sector. Although the growth rate for new orders slowed, it still indicated strong demand, suggesting that businesses are optimistic about future prospects. 

“India’s flash composite PMI slipped slightly in August, though it remained significantly higher than the historical average. The manufacturing sector experienced a softer rise in output, while services firms saw a slightly quicker rise in business activity. Although new order growth for the manufacturing sector slowed to the weakest since February, the pace of expansion remained sharp, indicating continued strong demand and favourable market conditions,” said Pranjul Bhandari, Chief India Economist at HSBC. 

The report added that the job creation also remained solid, with both manufacturers and service providers actively hiring to meet increasing demand. 

Overall, the August PMI data highlighted the resilience of India’s private sector, driven by strong demand and job creation. As the economy continues to recover, stakeholders will be keenly watching how inflation trends evolve and their potential impact on future growth. 

“Private sector companies in India forecast higher output levels in the year ahead, amid expectations that demand conditions will remain favourable,” report added.