India’s Services Sector PMI Hits 15-Year High

India’s services sector surged to a 15-year high in August 2025, with the HSBC India Services PMI rising to 62.9, driven by strong domestic and international demand, according to S&P Global data. This growth also triggered the fastest rise in prices in over a decade, as companies passed on rising input costs to customers. Output price inflation hit its highest level since July 2012, while export orders saw their strongest growth in 14 months. Despite this, employment growth remained modest

Key Highlights of PMI Data

• India Services PMI: Rose to 62.9 in August (from 60.5 in July).
• 15-Year High: Fastest pace of expansion since 2010.
• Composite PMI: Increased to 63.2, a 17-year high, reflecting strong growth in both services and manufacturing.
• Export Orders: Grew at the fastest pace in 14 months.
• Inflation: Output prices rose at their highest since July 2012, while input costs climbed at the fastest rate in nine months.

Reasons Behind the Growth

• Strong Domestic Demand: Businesses saw a sharp increase in new orders.
• Rising International Demand: Export-oriented services gained momentum.
• Business Confidence: Improved due to advertising plans and positive demand forecasts.

Inflationary Pressures

While demand surged, it came with a cost,

• Companies passed on higher input costs to customers.
• Output price inflation rose to a 13-year high.
• Economists warn that inflation, which fell to 1.55% in July (an 8-year low), may have bottomed out and could rise again.

Employment and Business Outlook

• Job Growth: Remained modest, despite higher demand.
• Confidence: Businesses expressed optimism for the year ahead, driven by plans for marketing campaigns and favorable market conditions.

Broader Economic Context

• India’s GDP grew at 7.8% in the last quarter, exceeding expectations.
• However, risks remain, including the 50% U.S. tariffs on Indian imports, which could dampen future momentum.
• Despite this, the PMI data suggests broad-based economic resilience in both services and manufacturing.

Key Takeaways for Exam

Purchasing Managers’ Index (PMI)

• PMI is an indicator of business activity in both the manufacturing and services sectors.
• It is a survey-based measure that reflects the perceptions of purchasing managers.
• PMI > 50 indicates expansion in business activity.
• PMI < 50 indicates contraction in business activity.