India’s private sector activity hit a record pace in August, driven by strong services demand, spurring job creation even though firms passed rising input costs to consumers, a survey showed Thursday.
The strength in demand also enabled firms to raise prices at the quickest pace in over 12 years.
The findings contrast with projections for a slowdown in economic growth in Asia’s third-largest economy, which was expected to average 6.4 per cent in the current fiscal year after a 7.4 per cent expansion during the first three months of 2025.
HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, jumped to 65.2 in August from 61.1 in July.
This reading confounded expectations in a Reuters poll that had forecast a decline to 60.5.
It was the highest level since the survey began in December 2005 and marked the 49th consecutive month of expansion, staying well above the 50-mark that separates growth from contraction.
The growth was underpinned by the sharpest rise in total new orders in nearly 18 years, underscoring strong demand conditions.
The services sector was the main driver, with its activity index soaring to a survey-high of 65.6. The manufacturing sector also registered impressive growth, with its preliminary PMI rising to 59.8, the highest since January 2008.
The expansion also spurred job creation, but the survey highlighted that companies were increasingly passing on higher input costs to consumers. The output price index climbed to 55.8 in August from 53.5 in July, the steepest increase in over 12 years.
This trend runs counter to the recent official inflation data, which showed consumer prices falling to an eight-year low of 1.55 per cent last month.
The Reserve Bank of India, which aims to keep inflation within a 2 to 6 per cent band, began cutting interest rates earlier this year to support growth. It held rates steady at its most recent meeting but is expected to cut again in the coming quarter.
Firms remained upbeat, with business sentiment for the year ahead strengthening to its highest level since March.
(With inputs from Reuters)