“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 the Middle East,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
The seasonally adjusted S&P Global India Services PMI Business Activity Index also recorded a consecutive 25-month of expansion in new business, as advertising and robust demand kept the index above the 50-mark.
A value of above 50 denotes expansion.
“Demand strength also fostered a heightened sense of optimism regarding the outlook, boding well for economic growth prospects,” De Lima said.
Strong services growth and capital spending pushed India’s GDP growth to a four-quarter high of 7.8% for the first quarter of FY24, according to data released last week.Financial, real estate & professional services grew in double digits at 12.2% in Q1, whereas trade hotels, transport, communication and services related to broadcasting expanded 9.2%.Among the four sub-sectors of PMI services index, finance & insurance led growth of both total new business and output in August.
The employment situation was better, as the rate of job increase was fastest since November.
On the inflation front, output inflation rose at the joint quickest pace in nearly six years.
“Anecdotal evidence indicated that robust demand conditions facilitated the passing on of cost increases to clients,” the report indicated. On the input front, inflation remained above output charges, as 400 surveyed companies suggested rising food, input and labour costs.
“However, 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 said.
