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India’s private sector economy expanded at its fastest pace on record in August 2025, according to the latest HSBC Flash India PMI data. The Composite Output Index rose sharply to 65.2up from 61.1 in July, signalling the strongest growth momentum since the survey began in December 2005.

The surge was driven by a spike in new ordersboth domestic and export, with demand from Asia, the Middle East, Europe and the US boosting sales. Service sector activity led the uptrend, with the Services Business Activity Index climbing to 65.6a fresh all-time high. Meanwhile, manufacturing also strengthened, with the Manufacturing PMI rising to 59.8the highest since January 2008.

Pranjul Bhandari, Chief India Economist at HSBC, noted that services gained significantly from new business inflows, while manufacturing benefitted from robust domestic demand. However, export order growth in factories remained flat compared with July.

Hiring also accelerated across the private sector, with services firms driving employment growth. This marks the continuation of a hiring streak since June 2022. Despite the surge in workloads, backlog accumulation stayed modest, suggesting companies were able to meet rising demand.

Inflationary pressures, however, intensified. Input costs climbed amid higher wages and raw material expenses, while output charges rose at the fastest pace since February 2013. Businesses said strong demand enabled them to pass on these higher costs to consumers.

Looking ahead, companies remain optimistic. August saw the most positive outlook since March, underpinned by expectations of continued strong demand. Both manufacturers and service providers anticipate further expansion in activity over the next 12 months