The Indian services sector growth touched an 11 month high in July, supported by a pickup in new exports orders and sharp rise in overall sales, a monthly survey said on Tuesday.
Illustration: Dominic Xavier/Rediff
The seasonally adjusted HSBC India Services PMI Business Activity Index was at 60.5 in July, little-changed from 60.4 in June, and the rate of expansion was the best seen since August 2024.
In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
“At 60.5, the services PMI indicated a strong growth momentum, led by a pick-up in new export orders,” said Pranjul Bhandari, Chief India Economist at HSBC.
Sustained increases in new business intakes were the main aspect behind output growth, the survey said, adding that Indian service providers also welcomed a stronger improvement in international demand for their services.
“They reportedly secured new work from Asia, Canada, Europe, the UAE and the US,” it said.
Going ahead, service providers were on average optimistic about their expectations for output in the year ahead.
Among the factors supporting business confidence were efficiency gains, marketing, tech innovation and a growing online presence, they said.
On the price front, input costs and output charges rose at faster rates than in June.
“The solid rise in output prices reflected greater cost burdens and demand strength,” the survey said.
“On the price front, both input and output prices rose a tad faster than in June but this could change going forward as indicated by the recent CPI and WPI prints,” Bhandari said.
The Consumer Price Index (CPI) based retail inflation has remained below 4 per cent since February.
It was at 2.1 per cent in June.
The wholesale price inflation (WPI) turned negative after a gap of 19 months, declining 0.13 per cent in June.
Meanwhile, RBI Governor Sanjay Malhotra-headed rate-setting panel on Monday started the three-day deliberations to decide the next bi-monthly monetary policy amid expectations of a pause in the rate easing cycle.
Governor Malhotra-headed six-member rate-setting panel — the Monetary Policy Committee (MPC) — is scheduled to announce the next bi-monthly policy rate on Wednesday (August 6).
Experts were of the opinion that the Reserve Bank may go in for a status quo this time and wait for more macro data after the announcement by the US to impose a 25 per cent tariff on Indian imports.
On the jobs front, Although the upturn added pressure on firms’ capacity, hiring moderated. July’s increase in employment was the slowest in 15 months.
“The rate of job creation was only slight, broadly converging to its long-run average.
“Fewer than 2 per cent of companies took on additional staff, with the vast majority indicating no change from June,” the survey said.
Meanwhile, the HSBC India Composite PMI Output Index was up fractionally from 61.0 in June to 61.1 in July, indicating a sharp rate of expansion that was the quickest since April 2024.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices.
Weights reflect the relative size of the manufacturing and service sectors, according to official GDP data.
The PMI results for July revealed mixed signs regarding the performance of the Indian private sector.
“New orders and output expanded at quicker rates, while job creation receded and business optimism faded.
“Meanwhile, inflationary pressures gathered pace,” the survey said.
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
