On the back of accelerated and solid upturn in new work orders, activity in India's dominant service sector rose to an eight-month high in the month of June. The seasonally adjusted Nikkei Services Business Activity Index rose above the watershed ‘50’ mark for the fifth month running in June, registering reading at 53.1 in June as against the previous month's 52.2. The Nikkei India Composite PMI Output Index which measures both manufacturing and services also rose to an eight-month high of 52.7 in June from 52.5 in May.
As per the survey report, inflows of new business in services companies grew strongly in June due to improved demand conditions and marketing efforts. Factory orders also increased, but at the weakest rate in four months. Furthermore, employment across the services sector rose modestly but at a rate that equaled May’s near four-year peak, while manufacturing jobs increased fractionally.
On the inflation front, the survey highlighted that inflationary pressures gathered speed in June month, with both input costs and output charges rising at quicker rates. Average cost burdens at services firms accelerated to a 3-month high, driven by higher prices of food and fuel and purchase costs at manufacturers rose at the slowest rate since last August. Going forward the output is expected by services firms to remain on an upward trajectory in the coming 12 months, on the back of better market conditions, the introduction of the goods & services tax and promotional activities.