India reported sustained growth in services sector output in June, with the rate of expansion quickening from May’s five-month low amid a stronger rise in new orders, according to HSBC India Services PMI survey released on July 3, 2024
The latest upturn could also be linked to an unprecedented expansion in international sales. Moreover, staffing levels at companies increased at the fastest pace since August 2022, as short-term and permanent staff were taken on to support pipelines of new work, as per the PMI survey.
“Positive client appetite encouraged service providers in India to recruit additional staff at the end of the first fiscal quarter. The pace of job creation was marked and the strongest in 22 months. Anecdotal evidence highlighted a mixture of short term and permanent hires for junior-, medium- and senior level positions,” it said.
Reportedly due to higher food, fuel and labour costs, service providers recorded a moderate increase in their average expenses. The pace of inflation was the weakest in four months. Subsequently, selling prices also rose at the slowest pace since February.
Rising from 60.2 in May to 60.5 in June, the seasonally adjusted HSBC India Services Business Activity Index pointed to a sharp expansion in services output. The pace of growth was sharp, faster than in May and well above its long-run average.
According to the private survey, the upturn in total new business was supported by a record expansion in international orders. Asia, Australia, Europe, Latin America, the Middle East and the US were destination geographies.
“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,” said Pranjul Bhandari, Chief India Economist at HSBC.
