India’s services activity reaches five-month high in August 2024

India’s services activity reached a five-month high in August 2024, with the HSBC India Services Business Activity Index registering a Purchasing Managers’ Index (PMI) of 60.9, according to S&P Global survey data.

The rise in services PMI, from 60.3 in July, is an outcome of strong demand, which in turn is a result of moderating inflation. Data furnished by the survey showed that rate of inflation was the least in August this year since August 2020.

“Fewer than 4 per cent of monitored companies signalled an increase in their average selling prices relative to July, with the remaining firms reporting no change. Subsequently, the overall rate of charge inflation across India’s service economy was moderate. The rise was also slower than that seen in July,” the survey said.

The survey report also reflected that August 2024 saw the most robust expansion rate since March. The rise in new orders — more so in the domestic market — has also been a reason for steady employment levels seen this year, although August saw a small dip in jobs compared to July.

The survey noted that there has been growth in payroll numbers, with employers projecting positivity about economic outlook. In the services sector as well as the manufacturing sector, increase in input expenses hit a six-month low, according to HSBC India, and this led to a decline in output price inflation during the month of August. 

Growth in new orders hit a 37-month stretch in August and the rate of increase was the strongest since April, the survey data showed.

Demand was high in terms of international orders but growth in this segment dropped to a six-month low and new export businesses increased at a slow pace in August, mainly owing to pervading global conditions, according to the survey. Rather, the rise in sales was mainly driven by the domestic market.

Finance and insurance was the sector that performed best, in terms of growth and output, the survey said. On the other hand, the consumer services sector witnessed the best growth in terms of input costs this August.

Overall, Indian service providers, the survey suggests, have indicated that the solid beginning to the second quarter of the ongoing fiscal year (FY25) has continued in August 2024.