India’s services PMI falls to 60.1 in August, overall conditions remain robust, ETCFO

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<p>India’s services PMI falls to 60.1 in August, overall conditions remain robust </p>
India’s services PMI falls to 60.1 in August, overall conditions remain robust

India’s services activity continued to expand in August but the purchasing managers’ index (PMI) for the sector fell to 60.1, according to data released by S&P Global on Tuesday. At 60.1, the August services PMI is well below the over-13-year high of 62.3 posted in July.

The overall conditions still remain robust despite elevated inflationary pressures, as per the business survey that showed exports were at a record high on robust foreign demand.

This can be attributed to the reading which was above the 50-mark separating growth from contraction for a 25th consecutive month – the longest stretch since August 2011.
Services firms indicated the sharpest upturn in new export business since the series started in September 2014. Asia Pacific, Europe, North America and West Asia were among the top sources of sales gains.

Total new business increased for the twenty-fifth month in a row during August.

“Indian services companies achieved a remarkable milestone in August, as they welcomed a series-record surge in new export business. Several regions contributed to the upturn, including Asia Pacific, Europe, North America and West Asia,” Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said.

However, inflationary pressures quickened and the prices charged index reached a peak last seen in June, even though input prices rose at a slower pace.

“Favourable demand trends also led to the joint-fastest increase in prices charged for Indian services in over six years, which may prompt attention from policymakers and potentially delay cuts to the benchmark repo rate,” De Lima added.

Hiring activity across the service economy continued to expand halfway through the second quarter. The rate of job creation was moderate, but the strongest seen since last November.

The overall level of positive sentiment climbed to its highest in the calendar year to date. Advertising, demand strength, plans to price competitively and a healthy number of client enquiries all boosted optimism in August, the report added.

  • Published On Sep 5, 2023 at 11:18 AM IST

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