Bengaluru - India’s services sector registered a slight acceleration in August, but persistently weak new business prevented activity from moving far above its recent trough, according to the latest PMI data compiled by S&P Global for HSBC.
The headline India Services Purchasing Managers’ Index (PMI) rose to 54.1 in August from July’s 53.3. That reading was a touch below a preliminary estimate of 54.5. By convention, any PMI reading above 50.0 denotes expansion in activity; nevertheless, the August figure remained fractionally under the index’s long-run average.
New business - the survey’s primary gauge of demand - expanded at the second-slowest pace in just over four years, reflecting ongoing softness in domestic orders. International demand offered limited support: new export orders grew in August at a broadly similar rate to July, providing little incremental momentum.
Labour market signals were brighter. Services firms reported the strongest pace of hiring in 15 months, indicating that companies retained enough confidence to add staff. At the same time, business sentiment remained cautious. Firms’ confidence in improved market conditions and demand was below its long-run average for a second month, although they did express guarded hope for future improvement.
Cost pressures ticked up modestly across the sector. Prices charged to clients rose at the quickest pace since March, suggesting that businesses were passing through part of higher operating expenses to customers.
On the broader activity front, India’s Composite PMI - which aggregates services and manufacturing readings - held steady at 54.3 in August. The flat composite reading reflected a stronger services print offset by weaker manufacturing momentum, with manufacturing growth slipping to a five-year low.
Separately, a Reuters poll cited in the reporting pointed to a projected GDP growth rate of 6.7% for the current fiscal year for Asia’s third-largest economy. The poll indicated that elevated oil prices and a weaker rupee were weighing on growth prospects, implying a slowdown from the previous quarter’s robust 7.8% expansion, which had outperformed expectations.
Summary takeaways
- Services PMI rose to 54.1 in August from 53.3 in July, slightly below the preliminary 54.5 estimate.
- New business growth remained subdued, at the second-slowest pace in over four years; new export orders were little changed from July.
- Hiring accelerated to the fastest pace in 15 months even as business confidence stayed below its long-run average for a second month.
This snapshot points to a services sector that is expanding but still constrained by weak demand, with companies balancing modest price pass-throughs against cautious expectations for improvement.