India’s services sector delivered a powerful performance in August 2025, recording its fastest growth in 15 years. The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, surged from 60.5 in July to 62.9 in August, marking the steepest expansion since June 2010
What’s Fueling the Upswing?
- Unwavering Order Momentum: New business orders rose for the 49th straight month, rising at the fastest pace in over 15 years
- Export Expansion: International demand intensified, with export orders hitting their third-strongest pace since this measure began in 2014
This surge was powered by both strong domestic consumption and buoyant global demand, particularly from markets like the US, Europe, and West Asia
Price Pressures: Broadening Inflation
While activity accelerated, so did prices:
- Input Costs: Rose at the fastest pace in nine months.
- Output Prices: Increased at the steepest rate since July 2012
This inflation uptick comes as retail inflation had just fallen to an eight-year low, signaling the bottom may have passed and price pressures could resurface
Employment & Business Sentiment
- Hiring: Employment rose modestly—in most cases part-time—to help manage surging demand
- Business Confidence: Climbed to a five-month high, with firms boosting advertising and anticipating continued demand growth
Momentum Across the Economy
The strong showing wasn’t limited to services. The Composite PMI, covering both services and manufacturing, climbed to 63.2 in August, marking a 17-year high
Notably, manufacturing PMI also reached new peaks, reinforcing a broad-based upswing across India’s private sector Business Standard
Why This Matters in the Bigger Picture
- GDP Boost: The services sector, contributing over half of India’s GDP, is a critical driver of economic growth.
- Global Market Resilience: Robust export demand shows global buyers remain upbeat about Indian services quality and delivery.
- Inflation Watch: While growth is strong, policymakers must monitor inflation trends closely to maintain economic stability.
- Policy Leverage: This momentum supports continued investment and reforms to amplify growth, especially in light of external risks like tariffs.
