India's services sector records 13-year high growth in July, boosted by international sales: PMI
New Delhi, August 3: India's services sector experienced a remarkable surge in growth during July, reaching a 13-year high, as demand conditions improved significantly and international sales picked up, according to a monthly survey released on Thursday.
The seasonally adjusted S&P Global India Services PMI Business Activity Index soared from 58.5 in June to 62.3 in July, indicating the sharpest increase in output since June 2010.
For the 24th consecutive month, the headline figure remained above the crucial 50 threshold. In the language of the Purchasing Managers' Index (PMI), a value above 50 signifies expansion, while a score below 50 indicates contraction.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, emphasised the resilience of the service sector and its essential role in driving India's economy. She noted that the July PMI results hinted at a substantial contribution from the sector to the overall GDP for the second fiscal quarter.
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Survey participants attributed the upturn to robust demand and increased new business activities. July witnessed the most significant improvement in demand for Indian services in over 13 years, with around 29 per cent of the surveyed companies reporting higher intake of new business.
Lima further highlighted that the rise in sales extended to both domestic and international markets, offering promising news amid a challenging global economic landscape. Services exports showed a widespread upturn, with increased sales to various countries, including Bangladesh, Nepal, Sri Lanka, and the UAE.
However, the survey indicated intensifying cost pressures, with companies reporting higher expenses for food, labour, and transportation. Despite this, firms were cautious about raising their charges and opted for a more moderate approach to pricing strategies.
Analysts observed that competitive advantages continued to support demand for Indian services, as output prices remained modest compared to several other nations.
While input cost inflation edged higher in July, service providers remained prudent in their pricing decisions to avoid deterring sales.
Regarding employment, companies continued to expand their workforces by hiring a mix of part-time, full-time, permanent, and temporary staff. The pace of employment growth in the service sector was relatively steady, similar to the preceding two months.
Looking ahead, service providers displayed optimism about business activity for the coming year. Growth expectations were fueled by projections of strong demand and marketing initiatives, signaling a positive outlook for the sector's future performance.
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- With inputs from agencies
