Highlights:
- India Services PMI rose to 54.1 in August from 53.3 in July.
- Services hiring grew at the fastest pace in 15 months.
- Around 11% of surveyed firms increased staffing levels during the month.
- New business growth strengthened on better demand and marketing activity.
India’s services sector gained momentum in August as stronger demand pushed business activity and new orders higher, while employment growth touched a 15-month high, according to the latest HSBC India Services PMI survey.
The seasonally adjusted HSBC India Services PMI Business Activity Index increased to 54.1 in August from 53.3 in July. A PMI reading above 50 indicates expansion in activity, while a reading below 50 signals contraction.
Although the index improved during the month, the August reading was still the second-lowest since March 2022 and remained slightly below its long-term average of 54.5.
Growth was supported by stronger business activity and an improvement in new orders. Companies said better customer demand and marketing efforts helped them secure more business. However, the pace of new business expansion remained among the weakest seen in nearly four-and-a-half years.
International demand also remained supportive. New export orders grew at a solid pace, broadly similar to July. Survey participants reported stronger demand from countries including Australia, Brazil, Canada, Japan, Malaysia, Singapore, Sri Lanka and the UAE.
One of the strongest signals from the August survey came from employment. Services companies increased hiring at the fastest rate in 15 months. Around 11% of surveyed firms reported higher staffing levels, with businesses adding employees to support customer service, sales and digital operations.
Meanwhile, outstanding business declined for the second consecutive month, although the drop was marginal. Companies linked the fall in backlogs to timely completion of work and relatively softer inflows of new orders.
Price pressures remained manageable. Input cost inflation increased only slightly and stayed moderate by historical standards. Businesses reported higher spending on electricity, labour, digital platforms, marketing and regulatory requirements. However, prices charged by services firms increased at the fastest pace since March as companies passed on some of the higher operating costs.
The broader HSBC India Composite PMI Output Index remained unchanged at 54.3 in August. Faster growth in services helped offset weaker manufacturing activity. Overall employment across the private sector rose at the fastest rate in 14 months, as strong services hiring outweighed job losses in manufacturing.
