S&P PMI: India’s services sector hits 15-m high in August ’24

India’s services sector continued its robust performance into August, with business activity expanding at its fastest pace since March, driven by an uptick in incoming new business, according to a report released by S&P Global on Wednesday.

The seasonally adjusted HSBC India Services Business Activity Index rose to 60.9 in August, up from 60.3 in July, marking its highest level in five months and staying well within expansion territory for the 37th consecutive month.

New order rates increased marginally from July and was the highest since April, with over one-quarter of surveyed companies reporting an improvement, and only five per cent indicating a deterioration.

Among sub-sectors, finance & insurance emerged as the best-performing area in terms of both output and new business growth.

The overall increase in sales was primarily driven by the domestic market, as new export business rose at a slower pace, reaching a six-month low in August.

Despite the slowdown, companies noted better demand from key markets in Asia, Australia, Europe, Latin America, the Middle East, and the US

Service providers reported further increases in operating expenses due to rising food, labour, and transport costs. However, the overall rate of inflation was moderate and the lowest since August 2020.

Less than four per cent of companies surveyed reported an increase in average selling prices compared to July, while the majority indicated no change. As a result, the overall rate of price inflation in India’s service sector fell from the previous month.

Employment growth remained solid, though it slowed to a four-month low in August. The volume of outstanding business also rose at a slower rate, marking the weakest increase since February.

Attribution: HSBC India Services PMI report

Subediting: M. S. Salama