The Indian services sector growth touched a 15-year high in August, driven by a sharp rise in new orders and output, amid substantial improvement in demand conditions, a monthly survey said on Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index was up from 60.5 in July to 62.9 in August, indicating the steepest rate of expansion since June 2010.
In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
According to the survey, a substantial improvement in demand during August pushed growth of new orders and activity to their highest rates in over 15 years. Moreover, the rise in international sales was the third-strongest since the series started in September 2014.
“India’s services PMI Business Activity Index reached a fifteen-year high last month, from 60.5 in July to 62.9 in August, on the back of surging new orders,” said Pranjul Bhandari, Chief India Economist at HSBC.
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Aiding the rise in total sales was a pick-up in growth of new export orders, the survey said, adding that panel members signalled greater demand from clients in Asia, Europe, the Middle East, and the US.
“The broad-based expansion in international sales bolstered overall demand, which prompted Indian services firms to hire additional workers. Reflecting higher labour costs and robust demand conditions, both input and output prices increased substantially in August,” Bhandari said.
On the price front, the rate of inflation quickened to a nine-month high. Meanwhile, demand buoyancy facilitated the steepest increase in output charges since July 2012.
Meanwhile, year-ahead expectations improved to a joint five-month high in August (equal to May). Some companies also hope to be able to take on more work as a result of staff recruitment in recent months.
Meanwhile, August data highlighted a broad-based pick-up in growth of output across India’s manufacturing and service sectors. Subsequently, the HSBC India Composite PMI Output Index rose from 61.1 in July to 63.2 in August, indicating the sharpest pace of expansion in over 17 years.
“The composite PMI rose to a 17-year high of 63.2 in August, which indicated strong broad-based output growth in both the manufacturing and service sectors,” Bhandari said.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices.
Weights reflect the relative size of the manufacturing and service sectors according to official GDP data.
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
Edited by Suman Singh
