In July, India’s services sector experienced a significant rebound, achieving its highest growth in 13 years. The recovery was driven by robust demand and new business gains, leading to an increase in the S&P Global India Services Purchasing Managers’ Index (PMI) to a record high of 62.3. The PMI is a survey-based index that measures activity levels in the services sector. An index reading above 50 indicates expansion, while a reading below 50 suggests contraction. This positive trend has been ongoing for 23 consecutive months since August 2021.
Services PMI at over 13-year high in July: key points:
1. Record High Output and Strong Demand
- Services sector output rebounded in July, reaching the fastest pace since June 2010.
- The survey-based index recorded a 13-year high of 62.3, indicating a significant expansion in activity levels.
- The upturn was attributed to strong demand and new business gains.
2. Job Creation and Workload
- Despite the increased workload, the pace of job creation remained slight and similar to the previous two months.
- Companies resorted to hiring a combination of part-time, full-time, permanent, and temporary staff.
3. Input Costs and Output Prices
- Input costs experienced the fastest increase in 13 months, driven mainly by rising food, labor, and transportation costs.
- However, firms seemed cautious about losing fresh contracts, leading to a slower increase in output prices.
4. Boost from Export Orders
- Overseas markets provided a boost, with firms reporting the second-fastest increase in export orders since the index was introduced in September 2014.
- Key sources of growth in export orders came from countries like Bangladesh, Nepal, Sri Lanka, and the UAE.
5. Positive Outlook
- The broad increases in sales both domestically and internationally were seen as particularly welcome news in the challenging global economic scenario.
- Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, expressed optimism about the positive trend.
6. Long-standing Expansion
- The headline figure of the Purchasing Managers’ Index (PMI) has been in the expansion zone for 23 consecutive months since August 2021.
7. Survey Details
- The PMI survey polled approximately 400 companies across various sectors, including non-retail consumer services, transport, information, communication, finance, insurance, real estate, and business services.