India's Services Sector Activity Reaches 10-Month High, Robust Demand In Both Domestic & Export Markets

In June, India's services sector activity boomed. It reached a 10-month high. The reason for this was robust demand in both the domestic and export markets, according to the HSBC survey released on Thursday.

According to Reuters, compiled by S&P Global in June, the seasonally adjusted HSBC India Services PMI Business Activity Index rose from 58.8 in May to 60.4. A neutral mark that separates growth from contraction on the index is the PMI threshold of 50.0.

According to Reuters, since August 2024, new orders have expanded at a fast rate. From the continued strength of the domestic market, services companies benefited the most. New export business saw a marked increase. According to panel members, as per the survey, overseas demand improved from the Asian, Middle Eastern and US markets.

Recruitment saw a positive impact due to the ongoing expansion of the Indian services sector. In June, employment rose for the thirty-seventh consecutive month. The rate of job growth outpaced its long-run average, although it was lower than the record figure achieved in May.

Across India's service economy, the rate of input cost inflation eased to a ten-month low in June and was below its long-run average. The rate of charge inflation remained above the series trend, despite easing from May. Outstanding business expanded at a slight rate that was nevertheless faster than in May.

The HSBC India Composite PMI, which combines services and manufacturing activity, rose to 61.0 in June from 59.3, marking the fastest expansion in 14 months. The manufacturing PMI data released this week showed manufacturing activity growth accelerated in June, in tune with the strong services sector performance.

According to the survey, with 18% of service providers forecasting growth, optimism regarding the outlook for output levels in one year was sustained. This proportion of upbeat firms was, however, the lowest since mid-2022. Hence, the overall level of confidence fell and was below its long-run average.