India's services sector growth surges to 5-month high in August: PMI

India's services sector recorded its fastest growth in 5 months this August, driven by resilient demand and easing inflationary pressures, according to the HSBC India Services Purchasing Managers' Index (PMI) compiled by S&P Global. The PMI rose to 60.9 in August, up from 60.3 in July, exceeding the preliminary estimate of 60.4. This marks the highest PMI level since March and continues the sector's expansion streak, which has remained above the 50-mark separating growth from contraction since August 2021. The latest reading is well above the long-term average, indicating robust growth in the sector. Chief India Economist at HSBC, Ms. Pranjul Bhandari, attributed this growth to a surge in new orders, particularly from the domestic market. "This growth was largely driven by an increase in new orders, especially domestic orders," she noted that employment levels remained strong. However, there was a slight decrease in the pace of hiring compared to July.

The new business sub-index reached a 4-month high in August, slightly increasing from July and remaining above its historical average. However, while still strong, international demand saw its growth pace slow to a 6-month low, reflecting softer global conditions. Despite this, the overall outlook remains positive, though business confidence fell to its lowest level over a year. Cost pressures in the services sector rose moderately in August, driven by higher food, labour, and transportation costs. However, the increase in input costs faced by service providers slowed to a 4-year low, with the sharpest rise in input costs reported in August. "On a positive note, input costs rose at their slowest pace in 6 months, with the manufacturing and service sectors following the same pattern. Consequently, output price inflation eased in August," added she. In contrast to the strong performance of the services sector, the manufacturing sector experienced a slight dip, with its PMI falling to a 3-month low of 57.5 in August.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.