 "service industry, IT services")
June data indicated a sustained upturn in Indian service sector output, with the rate of expansion quickening.
Amid a stronger rise in new orders and an expansion in international sales, growth in India’s dominant services sector recovered in June from a five-month low in May, according to a private business survey, which also showed improvement in job creation.
The headline Purchasing Managers’ Index (PMI) figure released by HSBC on Wednesday increased to 60.5 in June from 60.2 in May.
“June data indicated a sustained upturn in Indian service sector output, with the rate of expansion quickening from May’s five-month low amid a stronger rise in new orders and an unprecedented expansion in international sales. Moreover, staffing levels increased at the fastest pace since August 2022, as short-term and permanent staff were taken on to support pipelines of new work,” the survey stated.
The survey noted that new orders received by Indian service providers continued to increase in June, extending the current sequence of expansion to nearly three years. The pace of growth was sharp, faster than in May, and well above its long-run average.
Pranjul Bhandari, chief India economist at HSBC, said that activity growth in India’s service sector accelerated in June, led by an increase in both domestic and international new orders, which also encouraged services firms to increase their staffing levels.
“Input costs rose at a moderate pace, resulting in a softer uptick in output charges in June. Overall, service providers remain confident about the year-ahead business outlook, although the level of optimism moderated sharply during the month. The Composite PMI also accelerated in June, supported by greater inflows of new orders. Manufacturing firms contributed more to the expansion than services firms,” she added.
The survey noted that the upturn in total new business orders was supported by a record expansion in international orders, with Asia, Australia, Europe, Latin America, the Middle East, and the US being cited as sources of new work from abroad.
On the employment front, the survey noted that positive client appetite encouraged service providers in India to recruit additional staff at the end of the first financial quarter. The anecdotal evidence highlighted a mixture of short-term and permanent hires for junior, medium, and senior-level positions.
“Additional recruitment added to firms’ labour expenses and contributed to another increase in average cost burdens. Panellists also reported higher prices for food (chicken, eggs, and vegetables) and fuel,” the survey noted.
On the cost front, reportedly due to higher food, fuel, and labour costs, service providers recorded a moderate increase in their average expenses. The pace of inflation was nevertheless the weakest in four months, and selling prices also rose at the slowest pace since February.
|
January 2023 |
57.2 |
|
Februray |
59.4 |
|
March |
57.8 |
|
April |
62 |
|
May |
61.2 |
|
June |
58.5 |
|
July |
62.3 |
|
August |
60.1 |
|
September |
61 |
|
October |
58.4 |
|
November |
56.9 |
|
December |
59 |
|
January 2024 |
61.8 |
|
February |
60.6 |
|
March |
61.2 |
|
April |
60.8 |
|
May |
60.2 |
|
June |
60.5 |
|
Source: HSBC |
|
First Published: Jul 03 2024 | 11:53 AM IST
