According to a survey by HSBC and S&P Global, India’s services sector expanded at a five-month high in August. The Services Purchasing Managers’ Index (PMI) increased to 60.9 from 60.3, the largest increase since March and far beyond the 50-point barrier that indicates growth.
HSBC’s Chief India Economist, Pranjul Bhandari, attributed the improvement mostly to higher domestic orders. The new business subindex rose to a four-month high, highlighting the importance of domestic demand in driving development. Although overseas demand remained strong, growth has fallen to a six-month low.
Despite this, service providers remained cautiously hopeful about future demand, but confidence fell to its lowest level in over a year. Hiring in the sector continued but at a slightly slower rate.
Cost pressures, including food, labour, and transportation, increased moderately. However, cost increases for service providers were the slowest in four years. Input costs in the industrial and service sectors also increased at their slowest rate in six months.
With inflation dropping, businesses passed on less costs to customers, adding to India’s inflation figures, which fell to a near five-year low in July.
