India’s services activity expanded at a faster pace in August as stronger output and new business supported growth, while employment rose to a 15-month high.
Highlights
- The HSBC India Services PMI Business Activity Index rose to 54.1 in August from 53.3 in July.
- Despite the improvement, the pace of expansion was the second-weakest since March 2022.
- Growth was supported by stronger output and rising new business inflows.
India’s services sector activity expanded at a faster pace in August, supported by stronger output and new business, according to a monthly survey released on Thursday.
The seasonally adjusted HSBC India Services PMI Business Activity Index increased from 53.3 in July to 54.1 in August as demand conditions remained supportive and new business inflows continued to rise.
However, the rate of expansion in August was the second-weakest since March 2022. Companies cited subdued bookings, strong competition and reduced transport operations as factors weighing on overall growth.
“India’s services activity expanded faster in August. Growth was supported by stronger output and new business, although the overall pace was still among the weakest seen in over four years,” said Pranjul Bhandari, Chief India Economist at HSBC.
Employment conditions showed a stronger improvement. Firms continued hiring during August, with job creation reaching a 15-month high.
Price pressures, meanwhile, increased only modestly. Input cost inflation edged up slightly, while prices charged by companies increased at the fastest rate since March as firms passed higher operating costs on to customers.
Businesses reported increased expenditure on digital platforms, electricity, inputs, labour, marketing and regulatory requirements.
International demand also continued to support the services sector. New export orders increased solidly and at a rate similar to July. Companies reported higher business from customers in Australia, Brazil, Canada, Japan, Malaysia, Singapore, Sri Lanka and the UAE.
Business confidence about the year-ahead outlook remained broadly unchanged from July and stayed below its long-run average. Service providers remained optimistic about improving market conditions and demand, while technology adoption and new enquiries also supported sentiment.
Meanwhile, the HSBC India Composite PMI Output Index stood at 54.3 in August, its second-weakest level since February 2022. A faster expansion in services activity offset slower manufacturing growth, leaving the overall pace of private-sector growth unchanged during the month.
The HSBC India Services PMI is compiled by S&P Global based on responses from a panel of around 400 service-sector companies.
