India’s service industry expanded more than expected in August, leading firms to bring on new staff at the quickest rate in 14 years, a private survey showed.
The S&P Global India Services Purchasing Managers’ Index climbed to 57.2 in August from 55.5 in July, comfortably above the growth 50-mark and surpassing 55.0 estimates.
“The pick-up in growth stemmed from a rebound in new business gains as firms continued to benefit from the lifting of Covid restrictions and ongoing marketing efforts,” noted Pollyanna De Lima, economics associate director at S&P Global.
“Finance and insurance was the brightest area of the service economy in August, leading with regards to growth of sales and output.”
Global Demand Still Falling
Momentum is unlikely to be sustained over the coming quarters as higher interest rates, elevated price pressures, and growing concerns about a global recession pose significant risks to the economy.
Overseas orders contracted for a 30th consecutive month on persistent weakness in global demand.
Input prices, albeit elevated, increased at their slowest pace in nearly a year in August. Persistent strength in demand allowed firms to transfer some of their high-cost pressures onto their customers.
Meanwhile, overall inflation is widely expected to slow over the coming months, but it is unlikely to decline to within the Reserve Bank of India‘s medium-term target range of 2%-6% anytime soon.
That means the RBI, which has already raised its key repo rate by 140 basis points since May, is expected to continue with its rate hikes.
- Reuters, with additional editing from Alfie Habershon