PMI services expands to 57.2 in Aug on better demand, easing cost pressures

India’s dominant services industry grew faster than expected in August thanks to a solid expansion in demand and a continued easing in cost pressures, encouraging firms to hire at the quickest pace in more than 14 years, a private survey showed.

Driven by strong growth in services and manufacturing activity, Asia’s third-largest economy expanded at its fastest annual pace in a year during the April-to-June quarter.

However, that momentum is unlikely to be sustained over the coming quarters as higher interest rates, elevated price pressures, and growing concerns about a global recession pose significant risks to the economy.

Still, the S&P Global India Services Purchasing Managers’ Index rose to 57.2 in August from 55.5 in July, surpassing the 55.0 estimate in a Reuters poll. It remained above the 50-mark separating growth from contraction for a 13th straight month.

“The pick-up in growth stemmed from a rebound in new business gains as firms continued to benefit from the lifting of COVID-19 restrictions and ongoing marketing efforts,” noted Pollyanna De Lima, economics associate director at S&P Global.

“Finance and insurance was the brightest area of the service economy in August, leading with regards to growth of sales and output.”

While that encouraged firms to raise headcount at the fastest pace since June 2008, signs of demand remaining resilient boosted business confidence to its highest in over four years.

But overseas orders contracted for a 30th consecutive month on persistent weakness in global demand.

Input prices, albeit elevated, increased at their slowest pace in nearly a year in August. Persistent strength in demand allowed firms to transfer some of their high-cost pressures onto their customers.

Although overall inflation is widely expected to slow over the coming months, it is unlikely to decline to within the Reserve Bank of India’s medium-term target range of 2%-6% anytime soon.

That means the RBI, which has already raised its key repo rate by 140 basis points since May, is expected to continue with its rate hikes.

Faster expansion in services activity and strong manufacturing growth boosted the composite index to 58.2 in August from 56.6 in July.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

supply hyperlink

What do you think?

Written by admin

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

India vs Pakistan – “Greatest Sporting Event”: Shahid Afridi On India-Pakistan Matches

“Need To Learn From Virat Kohli”: Ex-India Star’s Advice For Suryakumar Yadav, Rishabh Pant