India’s services activity remained robust during July, as the HSBC India Services Business Activity Index, or services PMI, stood at 60.3, data released by S&P Global showed. The monthly services’ activity index stood above the 60-mark for the seventh consecutive month in July, as new business gains and “rosy demand” acted as the main drivers of growth, S&P Global said.
The latest reading, however, was marginally lower than 60.5 recorded in June, but was above the neutral 50-mark for the 36th straight month. According to S&P Global, the rise in output reflected a sustained increase in sales volumes in July, with survey participants particularly commenting on buoyant demand, tech investment and a growing online presence.
New export orders during the month increased at the third-strongest pace since the inception of the series in September 2014, amid strengthening demand for Indian services from across the world. Some of the sources of rising export orders mentioned by panellists included Austria, Brazil, China, Japan, Singapore, the Netherlands, and US, said the global ratings agency.
The composite PMI, a weighted average of both manufacturing and services PMI, stood at 60.7 in July, slightly down from 60.9 in June, signalling a continuation of the strong growth momentum seen recently. Data released on Thursday showed manufacturing PMI eased to 58.1 in July from 58.3 in June.
On the inflation front, output-prices climbed to a seven-year high in July for services firms, noted S&P Global. This was due to rising labour and materials (eggs, meat and vegetables) costs. At the composite level, input cost inflation also ticked higher in July, but remained below its long-run average. “Manufacturing firms reported stronger cost pressures than their services counterparts,” said S&P Global.
Moreover, favourable economic conditions and optimistic expectations for output supported recruitment among services firms. The latest rise in employment levels was among the strongest in close to two years. Job creation was achieved via the hiring of full- and part-time staff, anecdotal evidence showed, said S&P Global.
Looking ahead, services firms remained optimistic about the outlook for year ahead, noted Pranjul Bhandari, Chief India Economist at HSBC. Around 30% of the survey panel forecast greater output volumes in the next 12 months, while only 2% expect a decline.