India's services PMI holds strong at 60.3 in July

Indian service providers experienced a further upturn in business activity during July. Survey respondents mostly cited investment in technology, online offerings, new business gains and rosy demand as the main drivers of growth.

The third-fastest expansion in international sales for nearly ten years supported another robust increase in overall new order intakes, which in turn underpinned the hiring of full- and part-time workers.

Higher wage and material costs continued to push up business expenses, with the overall rate of inflation quickening from June. Stronger cost pressures and positive demand trends contributed to the steepest rise in prices charged for the provision of services for seven years.

The seasonally adjusted HSBC India Services Business Activity Index was at 60.3 in July, down only fractionally from 60.5 and above the neutral mark of 50.0 for the thirty-sixth straight month. The latest reading was more than six points higher than its long-run average and highlighted a substantial upturn in business activity.

The HSBC India Composite Output Index posted 60.7 in July, down only fractionally from 60.9 in June and above the crucial 50.0 no-change mark for the thirty-sixth month running. Hence, the latest reading signaled a continuation of the strong growth momentum seen recently. As has been the case since February, the manufacturing industry led the upturn.

Total new work rose sharply and at a pace that was considerably above its long-run average. Manufacturers experienced the stronger increase in new orders, despite a slowdown in its rate of expansion. Meanwhile, job creation remained solid across the two segments.

Worryingly, charged inflation climbed to a near 11-and-a-halfyear high in July amid stronger increases at goods producers and service providers. Input cost inflation also ticked higher in July, but remained below its long-run average. Manufacturing firms reported stronger cost pressures than their services counterparts.

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