India’s services recovery gains pace: PMI at highest since August 2024; export demand stays strong
India’s services sector expanded at its fastest pace in ten months in June, driven by robust domestic demand, higher international sales, and continued job creation, according to the HSBC India Services PMI report released Thursday. The seasonally adjusted Services PMI Business Activity Index rose to 60.4 in June from 58.8 in May, marking its strongest reading since August 2024.In PMI terms, a score above 50 signals growth, while a figure below that threshold points to contraction.“The Services PMI business activity index was up to a ten-month high, led by a sharp rise in new domestic orders. New export orders also expanded, albeit at a softer pace,” said Pranjul Bhandari, chief India economist at HSBC, as per PTI.She noted that margins improved as the increase in input costs remained lower than the hike in output prices.June saw the fastest expansion in new business orders since August 2024, with firms citing stronger domestic activity and increasing overseas demand, particularly from Asia, the Middle East, and the US.This uptick in demand also reflected positively on employment. The survey recorded the 37th consecutive month of job growth, although the pace of hiring was slightly lower than May’s record high. Despite this, the hiring rate stayed above the long-term average.International sales continued to grow, and export orders remained among the highest since this metric began in 2014, reported ANI. However, the month-on-month increase in overseas orders was the slowest in three months.Sector-wise, Finance and Insurance led growth in both output and orders, while Real Estate and Business Services posted the slowest expansion. On the cost front, Consumer Services firms faced the steepest input inflation, whereas Finance and Insurance firms recorded the fastest rise in output prices.Inflationary pressures showed signs of cooling. Input costs rose at the slowest pace in ten months, and output charge inflation softened from May, though still above the historical average. Some firms noted increased staff wages but were able to pass on costs due to strong pricing power.The broader private sector also reflected this momentum, with the HSBC India Composite PMI Output Index rising to 61.0 in June, its highest in 14 months.This index combines manufacturing and services data, weighted by sector contribution to GDP.Despite strong numbers, optimism among service providers moderated. “Service providers remained optimistic about future growth, though their confidence faded a tad,” Bhandari said, citing that only 18% of respondents expected output growth in the coming year, the lowest since mid-2022.
