The headline Purchasing Managers’ Index (PMI) released by HSBC increased to 60.5 in June from a five-month low of 60.2 in May. Demand strength and rising intakes of new business were cited as the key determinants of growth.
A reading above 50 on the index denotes expansion and that below signifies contraction.
“Activity growth in India’s service sector accelerated in June, with the index rising by 0.3ppt to 60.5, led by an increase in both domestic and international new orders,” said Pranjul Bhandari, Chief India Economist, HSBC.
This encouraged services firms to increase their staffing levels at the fastest pace since August 2022.
Supporting the upturn in total new business was a record expansion in international orders. Asia, Australia, Europe, Latin America, the Middle East and the US were all cited as sources of new work from abroad, according to the survey report. 400 services firms were surveyed for the index.On jobs front, anecdotal evidence highlighted a mixture of short-term and permanent hires for junior-, medium- and senior-level positions.Service providers remained confident of a rise in business activity over the course of the coming 12 months, with around 23% of panellists expressing optimism. However, the overall level of positive sentiment slipped to an 11-month low due to concerns surrounding market uncertainty and competition.
“Overall, service providers remain confident about the year ahead business outlook, although the level of optimism moderated sharply during the month,” Bhandari said.
As sister survey released Monday showed manufacturing activity in June rose to 58.3 from 57.5 in May.
Put together, the HSBC India Composite Output Index recovered to 60.9 in June from 60.5 in May, as new business and output expanded at faster rates. Overall private sector employment expanded at a sharp pace that was among the quickest since the series started in December 2005.
