Services activity across the country improved in June, with the HSBC India Services Business Activity Index, or services PMI, rising to 60.5 during the month from five-month low of 60.2 in May. The uptick was mainly a result of stronger rise in new orders and an “unprecedented expansion” in international sales, a release by S&P Global said.
The pace of increase in activity was quicker than in May and above its long-run average, the global ratings agency said. Demand strength and rising intakes of new business were cited as the key determinants of growth by panellists.
The manufacturing activity also witnessed a considerable recovery in June, largely due to the same reason. Data released on Monday showed manufacturing PMI rising to 58.3 from 57.5 in May.
As a result, the composite PMI, a weighted average of both manufacturing and services PMI, increased to 60.9 in June from 60.5 the previous month, S&P Global said.
During June, services firms witnessed a record expansion in international orders from Asia, Australia, Europe, Latin America, the Middle East and the US, the global ratings agency said.
A faster rise in activity also encouraged services firms to increase their staffing levels at the fastest pace since August 2022. Anecdotal evidence highlighted a mixture of short-term and permanent hires for junior, medium and senior level positions, S&P Global said.
On the inflation front, panellists reported higher prices for food (chicken, eggs and vegetables) and fuel. Average input prices, however, rose at a below-trend rate and one that was the softest in four months, said the global ratings agency.
Also, fewer than 5% of services companies opted to share additional cost burdens with their clients by lifting selling prices in June, resulting in only a moderate rate of output-charge inflation, it said.
Pranjul Bhandari, chief India economist, HSBC said : “overall, service providers remain confident about the year ahead business outlook, although the level of optimism moderated sharply during the month.”