New Delhi [India], September 3 : India's services sector registered its fastest pace of growth in more than 14 years as the HSBC India Services PMI Business Activity Index jumped to 62.9 in August from 60.5 in July, according to the HSBC PMI survey report.
This was the steepest rate of expansion since June 2010, reflecting a strong surge in demand and business activity.
HSBC report stated, "HSBC India Services PMI Business Activity Index - based on a single question asking how the level of business activity compares with the situation the month before - was up from 60.5 in July to 62.9 in August. This indicated the steepest rate of expansion since June 2010".
The sharp rise in the index shows that the Indian services economy benefited from a substantial improvement in demand during August. Both new orders and overall activity grew at their highest rates in over 15 years.
The report also shared that the international sales also improved, with the rise in exports marking the third-strongest increase since the series began in September 2014. Companies continued to expand their workforce, supported by robust job creation in recent months.
With sufficient capacity available to meet requirements, outstanding business increased only marginally, while there was also a modest uptick in employment.
On the cost side, firms reported higher expenses due to salary hikes and overtime payments.
As a result, input cost inflation quickened to a nine-month high. To cope with the rising expenses, companies raised their output prices.
Demand remained strong enough to absorb these increases, leading to the steepest rise in output charges since July 2012. The survey also noted that the broader private sector witnessed a strong performance.
The HSBC India Composite PMI Output Index, which tracks both manufacturing and services, climbed from 61.1 in July to 63.2 in August. This reflected the sharpest pace of expansion in more than 17 years.
The August data highlighted a broad-based pick-up in output across both services and manufacturing. Growth in new business intakes rose to its highest level since mid-2010.
However, the acceleration was more pronounced in the services sector, while the manufacturing industry continued to expand at a steady pace.
The report also shared that the aggregate employment across both sectors rose at a solid rate, stronger than in July. Services firms reported quicker hiring activity, while manufacturing firms maintained stable growth.
Overall, the August PMI surveys showed that India's economy is being strongly supported by rising domestic demand, faster job creation, and good growth in both services and manufacturing.