June services PMI rises on the back of new orders, international sales

In June, India's services sector rebounded from a five-month low in May, driven by increased new orders and a notable expansion in international sales, per a recent business survey. The Purchasing Managers’ Index (PMI), released by HSBC, rose to 60.5 from 60.2 in May, marking nearly three years of growth above the 50-point threshold that separates expansion from contraction. The survey highlighted a robust uptick in service sector output, accelerated growth in new orders, and unprecedented international sales expansion. Hiring also surged to its fastest pace since August 2022, supporting increased work pipelines with short-term and permanent staff.

Chief India Economist at HSBC, Mr. Pranjul Bhandari, attributed the sector’s growth to rising domestic and international orders, prompting firms to ramp up hiring. Despite a moderate increase in input costs, resulting in softer output charge increases in June, service providers remain optimistic about future business prospects. The Composite PMI for June also showed accelerated growth, driven by substantial inflows of new orders, with manufacturing firms playing a significant role in the overall expansion alongside services.

The survey noted a record surge in international orders from Asia, Australia, Europe, Latin America, West Asia, and the United States, underpinning the increase in new business activity. Enhanced client demand prompted additional hiring in various roles across junior, medium, and senior levels. However, higher food, fuel, and labour costs increased average expenses for service providers. However, inflation moderated compared to recent months, and selling price increases were subdued, marking the slowest rise since February.

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