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Truth that Matters. Stories that Impact

Business

India Services PMI Expands to 54.1 in August as Job Creation Reaches 15-Month High

Activity in India’s services sector picked up in August, driven by firm domestic demand, stronger output, and an increase in new client orders, with employment across the sector climbing to a 15-month peak.

What Happened

The seasonally adjusted HSBC India Services PMI Business Activity Index climbed to 54.1 in August, up from 53.3 recorded in July. According to survey data reported by PTI, the growth was sustained by solid output and resilient demand conditions. However, the overall expansion rate remained the second-slowest since March 2022, with survey respondents highlighting challenges such as intense competition, subdued bookings, and reduced transport operations.

Pranjul Bhandari, Chief India Economist at HSBC, noted that while activity expanded faster in August on the back of stronger output and new orders, the pace remained among the weakest observed in more than four years.

Key Highlights

  • Index Movement: The Services Business Activity Index moved up from 53.3 in July to 54.1 in August.
  • Employment Growth: Sector hiring strengthened markedly, lifting overall job creation to a 15-month high.
  • Price Pressures: Input cost inflation saw a slight uptick, while prices charged to customers increased at the fastest rate since March as businesses passed on higher operating expenses.
  • Cost Drivers: Companies reported higher spending across electricity, digital platforms, inputs, labour, regulatory requirements, and marketing.
  • International Demand: New export business expanded at a pace similar to July, supported by clients in Australia, Brazil, Canada, Japan, Malaysia, Singapore, Sri Lanka, and the UAE.
  • Composite Index: The HSBC India Composite PMI Output Index registered at 54.3 in August, marking its second-weakest reading since February 2022, as faster service sector growth balanced a slowdown in manufacturing.

Why This Matters

The survey data shows that the service economy remains an essential buffer for Indian private sector growth, offsetting softer performance among manufacturing producers. Although operating costs for digital platforms, utilities, and labour increased, businesses demonstrated the pricing power necessary to pass higher expenses onto clients. Furthermore, the 15-month high in hiring indicates that firms are maintaining staffing capacity to meet current order volumes despite broader competitive pressures.

What to Watch Next

Year-ahead business confidence among service firms remained broadly unchanged from July and held below its long-term average. Moving forward, business performance will hinge on whether anticipated improvements in market conditions, technology adoption, and incoming client enquiries materialise to support future activity.

Frequently Asked Questions

What was India’s Services PMI reading for August?

The HSBC India Services PMI Business Activity Index stood at 54.1 in August, rising from 53.3 in July.

How did hiring perform in the services sector?

Employment within the services sector expanded at a marked pace, with job creation reaching a 15-month high during the month.

What did the Composite PMI show for the overall private sector?

The HSBC India Composite PMI Output Index was 54.3 in August. Faster growth in services counterbalanced slower expansion in manufacturing, leaving the overall private sector growth pace unchanged.

Source: HSBC India PMI survey data reported via PTI and Mid-day.