New Delhi: The Indian services sector in July saw the highest level of activity in 13 years, as recorded by the S&P Global Purchasing Managers’ Index (PMI) released Thursday.
The report said that despite inflationary pressure, the services sector activity increased to 62.3 from 58.5 in June. A reading above 50 denotes expansion of activity while one below 50 implies a contraction.
The rise has been attributed to a robust demand strength, new business intake, and a pick-up in international sales.
India recorded the second-fastest increase in export orders since September 2014 with key sources of growth being exports to Bangladesh, Nepal, Sri Lanka and the UAE.
“The broad increases in sales across the domestic and international markets are particularly welcoming news, especially in light of the challenging global economic scenario,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
The report revealed that 29 per cent of the survey participants reported higher intake of new businesses.
The July data also signalled further increase in input costs facing Indian service providers. Regarding this inflationary trend, the report said that costs remained at a 13-month high owing to increased vegetable prices and extreme weather conditions. Several monitored companies recorded higher food, labour and transportation costs, it added.
“The resilience of the service sector underscores its vital role in fuelling India’s economy, with the PMI results for July so far pointing to a notable contribution from the sector to overall GDP for the second fiscal quarter,” De Lima said.
The S&P report added that the finance and insurance sectors showed the best results in terms of business activity and new orders. However, the consumer services and real estate sectors experienced the sharpest increase in input and output costs, respectively.
The employment trend in services companies moved in a positive direction, according to the report, as firms continued 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 last two months.
Also read: 28% GST on gambling: Only on buy-in, not winnings, says Sitharaman amid concerns of double taxation