India’s services sector activity expanded at a slower pace in the month of August, impacted by slower rise in new business inflows. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52.4 in August from 53.8 in July. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services – also slowed to of 52.6 in August as against 53.9 in July.
The report further said that activity, sales and employment were expanded at slower rate compared to July. Further, amid reports of delayed client payments, services companies registered a further increase in outstanding business during August. The rise was the thirty-ninth in as many months and accelerated to the fastest since April.
On the price front, input prices continued to increase, on the back of higher food, fuel and staff costs. But, the overall rate of inflation softened in August and was negligible in the context of historical survey data. Information & Communication was the only monitored category in which cost burdens did not rise. Besides, services companies lifted their selling prices again in August, to guard against the detrimental impacts of rising costs on margins.
Meanwhile, service providers remained confident of a rise in business activity in the coming 12 months, with optimism strengthening to a one-year high. Forecasts of better demand conditions, marketing initiatives and accommodative public policies all boosted sentiment in August.