India’s services sector expanded at its fastest pace in over 13 years in the month of July, aided by substantial improvement in international demand. As per the survey report, the seasonally adjusted S&P Global India Services PMI Business Activity Index jumped at 62.3 in July from 58.5 in June. Further, the S&P Global India Composite PMI Output Index -- which measures both manufacturing and services -- surged to 61.9 in July as against 59.4 in June.
The survey report noted that the upturn in total new orders was boosted by a pick-up in international sales. There was second-fastest increase in new export orders since the series started in September 2014. Bangladesh, Nepal, Sri Lanka and the UAE were key sources of growth. Companies continued to add to their workforces by hiring a combination of part-time, full-time, permanent and temporary staff. Service sector employment expanded at a slight pace that was broadly similar to those seen in the prior two months.
On the inflation front, Indian service providers faced a further increase in input costs. Moreover, the rate of inflation quickened to a 13-month high, on the back of greater food, labour and transportation costs. Services firms sought to protect margins from cost rises by lifting selling charges in July. Output prices increased at the slowest rate in three months. The latest results showed mild pressure on the capacity of service providers, as outstanding business volumes rose only marginally. The pace of accumulation softened since June.
