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India's services sector continued to expand in July, although employment growth slowed to its weakest pace in 15 months, according to the HSBC India Services PMI released on Tuesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index stood at 60.5 in July, slightly up from 60.4 in June. This signals a strong rise in output and marks the highest rate of expansion since August 2024. HSBC report stated "At 60.5 in July, the seasonally adjusted HSBC India Services PMI Business Activity Index - based on a single question asking how the level of business activity compares with the situation the month before - was little-changed from 60.4 in June and therefore signalled another sharp increase in output.... July's increase in employment was the slowest in 15 months, despite strengthening business confidence". The rate of job creation was only slight and aligned closely with its long-run average. Less than 2 per cent of companies hired new staff, with the majority reporting no change in their workforce compared to June. The growth was driven by steady improvements in demand for Indian services, which supported increases in total new orders, international sales, and output. Indian service providers reported receiving new work from Asia, Canada, Europe, the UAE, and the US. The rate of growth in external sales was sharp and recorded as the second-fastest in a year, just behind May. Among the sectors, Finance & Insurance led in terms of both new orders and overall business activity. On the other hand, Real Estate & Business Services showed the slowest pace of growth. Firms remained optimistic about future business activity, but expectations were mixed. Business confidence was positive overall, yet showed some signs of softening. Meanwhile, inflationary pressures were more visible in July. Both input costs and output charges rose at faster rates than in June, with output price inflation surpassing its long-run average. The HSBC India Composite PMI Output Index, which tracks combined activity in the manufacturing and services sectors, rose marginally from 61.0 in June to 61.1 in July. This indicates a sharp expansion in private sector activity, the strongest since April 2024. The composite data revealed that sales growth reached a 15-month high. However, firms downgraded their future growth expectations. The report also indicated that the Future Output Index fell to its lowest level since March 2023. As a result, private sector hiring was also impacted, recording the weakest increase in employment in 15 months. (ANI)
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