India Services PMI hits 15-year high in August on new orders, output rise

India services PMI: Composite PMI Output Index rose to 63.2 in August from 61.1 in July

India’s services sector continued its strong run, hitting a 15-year high in August on new orders and rising output led by international demand. The HSBC India Services Purchasing Managers’ Index (PMI) climbed to 62.9, up from 60.5 in July, according to S&P Global data released on Wednesday.

New orders rise for 49th consecutive month

Demand buoyancy, efficiency gains, and greater inflows of new business were among the key reasons for the strongest growth since 2010. New orders grew in August for the 49th month in a row, and at the fastest pace in more than 15 years. About 37 per cent of service providers reported growth, compared to only 11 per cent who saw a decline.

 

 

"The broad-based expansion in international sales bolstered overall demand, which prompted Indian services firms to hire additional workers. Reflecting higher labour costs and robust demand conditions, both input and output prices increased substantially in August," said Pranjul Bhandari, chief India economist at HSBC. 

 

Total sales were also boosted by stronger demand from abroad. Export orders rose at the third-fastest rate since this question was added to the survey in 2014, with higher demand coming from clients in the US, Europe, and the West Asia.

Hiring in services sector picks up in August

Hiring in the services sector picked up slightly from July but remained moderate overall, with most new jobs being part-time. This steady job creation helped companies manage workloads. Backlogs increased marginally during the same period.

 

Business expenses rose in August at the fastest pace since last November, mainly due to higher labour costs such as salary hikes and overtime pay. Some firms also reported increased transport and material costs. 

 

Business confidence highest in five months

Business confidence improved to a five-month high, supported by higher advertising budgets and expectations of strong demand. Some firms also expect to take on more work thanks to recent staff recruitment.

Composite PMI hits 17-year high

The Composite PMI Output Index rose to 63.2 in August from 61.1 in July, indicating the sharpest pace of expansion in over 17 years. The increase highlighted a pick-up in growth of output across India’s manufacturing and services sectors.

 

“The composite PMI rose to a seventeen-year high of 63.2 in August, which indicated strong broad-based output growth in both the manufacturing and service sectors,” said Bhandari.

Manufacturing PMI at 18-year high in August

India’s manufacturing activity also reported a strong growth in August, with the manufacturing purchasing managers index (PMI) touching an 18-year high of 59.3 during the month. The growth came on the back of strong demand, despite concerns over steep US tariffs.  Earlier in July, the HSBC India Manufacturing PMI, compiled by S&P Global, had risen to a 16-month high of 59.1.