India’s Private Sector Shows Resilience with 37th Month of Strong Output

India’s private sector witnessed robust growth for the 37th consecutive month in August, as per the HSBC Flash India PMI report. The Composite PMI Output Index stood at 60.5. While manufacturing saw a dip to 57.9, the services sector thrived at 60.4. Job creation remained strong despite mixed inflationary pressures.

India's private sector showcased strong performance across the nation for the 37th month in a row this August, according to the latest HSBC Flash India PMI (Purchasing Managers' Index) report. The Composite PMI Output Index reached an impressive 60.5, marking continuous expansion despite a minor decrease in manufacturing activity.

The report highlighted that the Output Index stood at 60.5 in August, slightly down from 60.7 in July, indicating a sharp expansion rate above its long-term average of 54.6. Meanwhile, the Manufacturing PMI decreased to 57.9, signaling slower growth than previous highs. On the other hand, the Services PMI soared to 60.4, reflecting a robust recovery in the services sector, a key driver of post-pandemic economic activity.

The HSBC Flash India Manufacturing PMI slipped from 58.1 in July to 57.9 in August, still significantly above the historical average of 54.0. The report also pointed out that new business inflows remained robust, fostering positive sentiment in the private sector. Although new order growth decelerated, it continued to signal strong demand, indicating business optimism about future prospects.

Despite the composite PMI sliding slightly in August, it remained well above historical averages. The manufacturing sector saw a softer rise in output, while the services sector experienced a quicker rise in business activity. "The manufacturing sector's new order growth slowed to its weakest since February, yet the expansion pace remained sharp, showing ongoing strong demand and favorable market conditions," remarked Pranjul Bhandari, Chief India Economist at HSBC.

The report also underscored solid job creation, with manufacturers and service providers actively hiring to meet rising demand. Despite mixed inflationary pressures, with eased input cost inflation but surged output price inflation to an 11-year high in manufacturing, businesses balanced profitability and consumer demand.

In summary, August PMI data underscored the resilience of India’s private sector, driven by strong demand and job creation. As the economy recovers, stakeholders will closely monitor evolving inflation trends and their potential impact on future growth. The positive outlook for services and steady manufacturing activity bode well for India's economic trajectory in the upcoming months, according to the report.