Combined output for both manufacturing and services sectors grew, led by an uptick in manufacturing sector activity, on new orders and increased business activity, according to the HSBC Flash Purchasing Manager’s Index (PMI) in from S&P Global Market Intelligence, in July.

The reading came in at 61.4 in the reporting month, more than the actual value of 60.9 in June. A PMI value above 50 indicates an expansion in business activity in the sector. The Flash PMI readings are derived based on the responses from 75% to 85% of the panellists, who participate in the survey to arrive at the final value, that is released in the first week every month.

“The rise in output in July was led by a further increase in business activity in the manufacturing sector, while the pace of expansion in services output also accelerated and remained well above its long-run average” , said Pranjul Bhandari, Chief India Economist, HSBC.

The optimism in India’s private sector activity was attributed to a sharp increase in the new orders, according to the statement. Hiring in July improved due to capacity pressures in firms, with manufacturers performing better than the service providers on this front.

Firms experienced an increase in input costs in the reporting month due to improved demand, according to the S&P statement. “The rate of input-cost inflation continued to trend higher in both sectors, which has driven firms to keep raising sales prices” said Bhandari. Higher prices were registered in coal, leather, pharma products, rubber and steel for manufacturers. For service providers, vegetables, egg and meat inflation were cited as sources of inflation.

Respondents expressed an overall optimism due to “increased advertising, buoyant demand and new client enquiries” according to the S&P statement.