India Services PMI increased to 54.1 in August from 53.3 in July, signalling a faster expansion in business activity, according to the latest HSBC India Services PMI survey. However, growth remained the second-weakest in nearly four-and-a-half years and was fractionally below the long-run average of 54.5.
Stronger output and new business supported the improvement during August. New business inflows accelerated on better customer demand and marketing initiatives, although the pace of sales growth remained the second-slowest since March 2022. Some service providers reported subdued bookings, intense competition, challenging market conditions and weaker client interest in selected services.
Hiring reaches 15-month high
Employment was a key positive in the August survey. Service providers increased staffing at a marked pace, with around 11% of survey respondents reporting higher employment. The strongest job creation rate in 15 months was linked to efforts to strengthen customer service, sales and digital operations.
International demand also remained supportive. New export orders increased at a solid pace broadly similar to July, with firms reporting stronger business from customers in Australia, Brazil, Canada, Japan, Malaysia, Singapore, Sri Lanka and the UAE. Despite this, export sales growth remained below the average recorded over the past year.
Business confidence about the next 12 months was broadly unchanged from July and remained below its long-run average. Firms continued to expect market conditions and demand to improve, while technology adoption and new enquiries supported sentiment. Outstanding business declined marginally for the second consecutive month as firms reported softer inflows of new work and timely completion of incoming orders.
Price pressures remained moderate by historical standards, although input cost inflation edged up slightly. Firms reported higher spending on digital platforms, electricity, inputs, labour, marketing and regulatory requirements. Prices charged by service companies rose at the fastest rate since March as businesses passed higher operating costs on to customers, according to HSBC Chief India Economist Pranjul Bhandari.
At the broader private-sector level, the HSBC India Composite PMI Output Index remained unchanged at 54.3 in August. Faster services growth offset slower manufacturing activity. Aggregate employment rose at its fastest pace in 14 months, while composite input cost inflation eased to a seven-month low and charge inflation accelerated to its strongest level since April.
Source: SP Global
