India's Services Growth Picks Up In Aug, But Remains At 4-yr Low: PMI
It has been observed that firms continued to hire, with job creation reaching a 15-month high, while price pressures picked up only modestly. “Employment increased at a marked rate, with job creation reaching a 15-month high. Price pressures picked up only modestly: input cost inflation edged up slightly, while prices charged rose at the fastest rate since March as firms passed on higher operating costs,” Bhandari said
New Delhi: India’s dominant services sector accelerated slightly in August but persistently subdued new business kept overall activity near its weakest in more than four years. Nevertheless, firms ramped up hiring at the fastest pace in over a year. The rate of expansion recorded in August was the second weakest since March 2022 due to subdued bookings, strong competition and reduced transport operations, a private survey showed on Thursday.
As per the seasonally adjusted HSBC India services PMI business activity survey, the index rose from 53.3 in July to 54.1 in August, as demand conditions remained supportive and new business inflows continued to rise. The index is, however, based on a single question asking how the level of business compares with the situation the month before.
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that India's services activity expanded faster in August. “Growth was supported by stronger output and new business, although the overall pace was still among the weakest seen in over four years, with some firms citing subdued bookings, competition and reduced transport operations,” Bhandari said.
It has been observed that firms continued to hire, with job creation reaching a 15-month high, while price pressures picked up only modestly. “Employment increased at a marked rate, with job creation reaching a 15-month high. Price pressures picked up only modestly: input cost inflation edged up slightly, while prices charged rose at the fastest rate since March as firms passed on higher operating costs,” Bhandari said.
As per the survey, companies reported higher spending on digital platforms, electricity, inputs, labour, marketing and regulatory requirements. “Meanwhile, international demand continued to support growth. New export orders rose solidly and at a similar rate to July, with companies reporting gains from clients in markets including Australia, Brazil, Canada, Japan, Malaysia, Singapore, Sri Lanka and the UAE,” the survey noted.
The survey, however, noted that service providers remained hopeful that market conditions and demand would improve, with technology adoption and new enquiries also supporting optimism. “An acceleration in growth of services activity offset a slowdown in manufacturing and left the pace of private sector growth unmoved in August. However, quicker expansions in aggregate employment and new order volumes were recorded,” it said.
