India’s business activity increased at the fastest pace in three months in July, owing to strong demand, particularly in the services sector. A poll by HSBC’s Flash India composite purchasing managers’ index, produced by S&P Global, found that the index increased to 61.4 in July from 60.9 in June, representing three years of continuous improvement. The indicator measures growth of more than 50, suggesting a robust private sector.
The spike was led by the services industry, which saw its PMI rise to 61.1, a four-month high, while manufacturing experienced significant growth, with a PMI of 58.5, the highest since April. Pranjul Bhandari, HSBC’s top India economist, stated that the growth was driven by favourable market circumstances, rising client demand, and technology developments.
The private sector created jobs at its quickest rate since April 2006, bolstering corporate optimism despite rising input costs. Prices increased at the fastest rate in almost 11 years, but strong demand enabled businesses to pass on costs to customers.
Rising prices may have an impact on the central bank’s interest rate outlook as it attempts to bring inflation back to its 4% objective, with a rate drop predicted next quarter.
