India’s Services PMI Holds Strong At 60.3 In July
Even after a slowdown in growth, India has now gone past the neutral mark of 50 for the thirty-sixth consecutive month
With investments in technology, online offerings and rosy demand being the drivers of growth, India’s service sector registered a substantial upturn in business activity in July. The seasonally adjusted HSBC India Services Business Activity Index stood at 60.3 in July, indicating a marginal dip from 60.5 in the June month. Even after a slowdown in growth, India has now gone past the neutral mark of 50 for the thirty-sixth consecutive month.
According to the HSBC India Services PMI, business expenses continued to remain on an upward trajectory due to higher wages and material costs as inflation quickened from June. Charge inflation also stood at a seven-year high, owing to positive demand trends and strong cost pressures.
The sales volumes in July reported a sustained increase due to an increase in output, while the total new orders expanded at a historically sharp pace. The international sales reported a third-fastest expansion since September 2014 as the export orders from Austria, Brazil, China, Japan, Singapore, the Netherlands and the US strengthened.
Favourable economic conditions led to a solid rise in recruitment among the firms in the service sector, with the latest rise being the strongest in nearly two years. The hiring of full-time along with part-time staff contributed to the job creation. However, despite the rise in recruitment, the backlog volumes rose moderately in July, the report stated.
“Robust demand conditions, reflected by increased new orders from both domestic and international markets, led firms to increase hiring levels. On the price front, higher wages and material costs led to a further increase in input costs. Consequently, output prices rose at the fastest pace in over 11 years. Service sector activity rose at a slightly slower pace in July, with new business increasing further, primarily driven by domestic demand,” said Pranjul Bhandari, Chief Economist at HSBC.
As far as the future outlook is concerned, around 30 per cent of the survey panel forecast greater output volumes in the next 12 months, while two per cent expect a decline, according to the report. The respondents cited online offerings, investment in tech and new business gains as drivers of growth.
