HSBC’s India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 54.1 in August from July’s 53.3, but was slightly lower than a preliminary estimate of 54.5.
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A PMI above 50.0 signals expansion in activity. However, the headline reading was fractionally below its long-run average. New business – the survey’s primary demand indicator – grew at the second-slowest pace in over four years.
International demand offered limited support as new export orders expanded at a broadly similar rate to July.
On the labour front, services firms hired at the fastest rate in 15 months suggesting some confidence remains.
However, business confidence was below its long-run average for a second month although firms were cautiously hopeful market conditions and demand would improve.A Reuters poll showed Asia’s third-largest economy growing 6.7% this fiscal year, weighed down by elevated oil prices and a weak rupee, pointing to a slowdown from solid 7.8% growth last quarter that beat expectations.
Cost pressures ticked up modestly. Prices charged to clients rose at the fastest pace since March with firms passing on higher operating expenses.
India’s Composite PMI, which combines services and manufacturing, held flat at 54.3. A quicker services expansion was needed to hold the composite steady as manufacturing growth slipped to a five-year low.