India’s Services Growth Improves in August, but Demand Remains Weak
India’s dominant services sector recorded a modest improvement in August, but overall activity remained close to its weakest level in more than four years, according to the HSBC India Services Purchasing Managers’ Index (PMI). The index rose to 54.1 in August from 53.3 in July, although it was slightly below the preliminary estimate of 54.5. A reading above 50 indicates expansion.
Despite the improvement, new business growth remained subdued, registering its second-slowest pace in more than four years. International demand provided limited support, while business confidence stayed below its long-term average for a second consecutive month. However, services companies increased hiring at the fastest rate in 15 months, suggesting continued cautious optimism about future demand.
Cost pressures also edged higher, with prices charged to clients rising at their fastest pace since March as companies passed on increased operating expenses. The Composite PMI remained unchanged at 54.3, as stronger services activity offset a slowdown in manufacturing growth, which fell to a five-year low. A Reuters poll expects India’s economy to grow 6.7% this fiscal year, down from 7.8% growth in the previous quarter.
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