Due to favourable demand circumstances and a slight easing of cost constraints, August saw higher growth for India’s dominant services sector than anticipated. From a four-month low of 55.5 in July, the S&P Global India Services Purchasing Managers’ Index, also known as the PMI index, increased to 57.2 in August, exceeding the 55.0 predictions in a Reuters poll. For the thirteenth consecutive month, it stayed above the 50-point threshold distinguishing growth from contraction.
According to the poll, companies increased hiring at the fastest rate in more than 14 years as a result of new business expansion that was more robust.
“Indian services activity rose strongly midway through the second fiscal quarter, with the pace of expansion recovering some of the ground lost in July. The pick-up in growth stemmed from a rebound in new business gains as firms continued to benefit from the lifting of COVID-19 restrictions and ongoing marketing efforts,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
“While the rate of charge inflation was broadly similar to July, there was a considerably softer upturn in input costs. The latter rose at the weakest pace in close to a year. There were other positives in the latest results. Business confidence strengthened substantially, reaching its highest since May 2018, while employment rose at the fastest pace in over 14 years,” she said.
Among the sectors, “finance and insurance was the brightest area of the service economy in August, leading with regards to growth of sales and output,” the economist said.
During the April to June quarter, India’s economy grew at its quickest annual pace in a year, propelled by strong expansion in services and manufacturing activities. However, other economists believe that the momentum may weaken during the upcoming quarters as a result of considerable dangers to the economy posed by rising interest rates, increased pricing pressures, and growing worries about a global recession.
The study also revealed that service organisations anticipate increased output during the ensuing 12 months, with optimism reaching its highest level in more than four years.
“Outstanding business volumes at Indian services companies continued to increase in August, taking the current sequence of accumulation to eight months. The rate of expansion was solid and the fastest in a year-and-a-half,” the survey said.
