India's service activity eased to 60.3 in July compared with 60.5 in the previous month as new business expanded at a slower pace and cost pressures mounted for firms, according to the results of a private survey released on August 5.
The HSBC India Services Business Activity Index has stayed above 60 since the start of the year, and was six points higher than the long-run average despite in July.
"Service sector activity rose at a slightly slower pace in July, with new business increasing further, primarily driven by domestic demand," said Pranjul Bhandari, chief India economist, HSBC.
Exports helped maintain momentum, as new orders rose at the third strongest pace since September 2014.
Service exports were 5 percent higher in FY24 at $341.1 billion, even as goods exports had slumped in the previous fiscal. The government has been trageting a further rise in services exports to $1 trillion by the end of the decade, with the trade in services almost half of total exports.
Buoyant demand also helped support hiring, as the rise in employment levels was among the strongest in close to two years.
"Favourable economic conditions and optimistic expectations
for output supported recruitment among services firms," the release stated.
Around of a third of 400 firms surveyed expect greater output volumes over the next year.
The results of services was in line with manufacturing activity, which had also eased slightly to 58.1 in July compared with 58.3 in the previous month, on account of higher inflation and easing of domestic orders.
In the case of services, firms had higher pricing powers as they increased prices to the highest level in seven years.
Overall private sector activity remained strong with composite index easing to 60.7 in July from 60.9 in the previous month.
"India’s composite PMI recorded another month of robust expansion in July, albeit at a slightly slower pace than in June. Robust demand conditions, reflected by increased new orders from both domestic and international markets, led firms to increase hiring levels," Bhandari said.
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