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India’s Services PMI for July followed the manufacturing PMI, standing at 60.3, down slightly from 60.5 in June. The Services PMI numbers indicate their thirty-sixth month of expansion.
Indian service providers saw a continued increase in business activity during July.
There was a strong rise in new orders, driven by both domestic and international demand. New export orders grew at the third-fastest pace since September 2014, with notable increases from countries like Austria, Brazil, China, Japan, Singapore, the Netherlands, and the US.
Higher wages and material costs pushed up business expenses, with the overall rate of inflation increasing from June. This led to the steepest rise in prices charged for services in seven years.
“Robust demand conditions, reflected by increased new orders from both domestic and international markets, led firms to increase hiring levels. On the price front, higher wages and material costs led to a further increase in input costs,” said Pranjul Bhandari, Chief India Economist, HSBC.
“Consequently, output prices rose at the fastest pace in over 11 years. Service sector activity rose at a slightly slower pace in July, with new business increasing further, primarily driven by domestic demand. Looking ahead, services firms remained optimistic about the outlook for the year ahead,” Bhandari added.
The demand for services led to a solid rise in employment, with companies hiring both full- and part-time workers. This was among the strongest employment growth seen in nearly two years.
The PMI, an index ranging from 0 to 100, indicates expansion above 50, contraction below 50, and no change at 50.
Service providers remained optimistic about future growth prospects, with around 30% of surveyed companies expecting higher output volumes in the next 12 months. Confidence was supported by favorable economic conditions, increased demand, and new business opportunities.
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