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:
Services PMI at over 13-year high in July
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.