India’s services sector activity hits 5-month high in August

India's services sector sees accelerated growth in August, with productivity gains and easing cost pressures, but future optimism declines.

Business activity in India’s services sector accelerated at a five-month high pace in August, aided by productivity gains, a pullback in cost pressures which eased to a four-year low, and higher domestic demand. However, optimism among firms about next year’s prospects slumped to a 15-month low, as per a private survey-based index.

The seasonally adjusted HSBC India Services Business Activity Index, based on responses from 400-odd private players, rose to 60.9 in August from 60.3 in July.

A reading of over 50 on the seasonally adjusted PMI indicates an expansion in activity levels.

However, optimism among services firms about next year’s prospects slumped to a 13-month low, while it slipped to a 15-month low for India’s private sector manufacturers and services players on the whole, as per a private survey-based index.

According to the survey, employment levels remained robust, though there was a slight decrease in the pace of hiring compared to July.

“Confidence in the year-ahead outlook for business activity, coupled with rising backlogs and sustained growth of new business continued to support job creation across the service sector,” the survey noted.

Meanwhile, the HSBC India Composite Output Index stood at 60.7 in August, unchanged from its July reading.