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India's services sector and broader private sector posted strong growth in June, driven by rising domestic and international demand, job creation, and easing price pressures, according to the HSBC India Services PMI report.
The services sector saw business activity rise to a ten-month high, signaling a positive start to the new fiscal year. The seasonally adjusted Services PMI index rose to 60.4 in June from 58.8 in May, marking the highest level since August 2024. The improvement was supported by robust domestic demand, a notable increase in export orders, and a healthy rise in new business. Pranjul Bhandari, Chief India Economist at HSBC, said, "The Services PMI business activity index was up to a ten-month high, led by a sharp rise in new domestic orders. New export orders also expanded, albeit at a softer pace. Margins improved, as the rise in input costs was below that seen for output charges. Service providers remained optimistic about future growth, though their confidence faded a tad." Service providers reported strong growth in output and new orders, with international sales also continuing to expand, albeit at a slightly slower pace. Companies highlighted stronger demand from key international markets including Asia, the Middle East, and the US. The growth in export orders remained one of the highest since this data point was first recorded in 2014, despite the monthly pace of increase being the slowest in three months. Growth was broad-based across the services sector. The Finance & Insurance segment led in both output and new orders, while Real Estate & Business Services posted the slowest gains. Consumer services firms faced the highest input cost pressures, while Finance & Insurance saw the steepest rise in output charges. June also saw the 37th consecutive month of job growth in the services sector. However, the pace of hiring slowed slightly from May's record level, particularly in the service industry, which affected the broader private sector employment figures. Inflationary pressures showed signs of easing in June. Input cost inflation in the services sector hit a ten-month low and stayed below the long-run average. While some companies cited higher staff wages, many were able to pass on these costs to clients, thanks to strong pricing power. Nonetheless, the rate of output charge inflation declined from May but remained above the historical average. The HSBC India Composite PMI Output Index rose to 61.0 in June, the highest in 14 months. Both sectors benefited from strong domestic demand and a record jump in international sales. (ANI)
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