A gauge of India's services sector rose to its highest since February on account of inflows of new work and improving demand.
The India Services Business Activity Index, compiled by IHS Markit, stood at 56.7 in August compared with 45.4 in July. The gauge expanded after four months. A reading above 50 indicates expansion in business activity.
“The latest reading pointed to a marked rate of expansion that was the fastest in one-and-a-half years,” according to a media statement.
The Composite PMI Output Index, too, rose to 55.4 in August from 49.2 in the preceding month.
New orders placed with service providers rose after three months in August. The pace of expansion was the quickest in eight-and-a-half years.
Sales growth stemmed from greater consumer footfall, reopening of several firms and successful advertising. While demand in the domestic market was generally conducive of growth, firms saw a further decline in new export orders, the statement said. The downturn was often associated with the pandemic and travel restrictions.
Service providers expect the lifting of pandemic-related restrictions to support the economic recovery. Output is predicted to rise over the course of the coming 12 months, with the overall level of positive sentiment climbing to a five-month high. The improvement was in stark contrast to July when companies were downbeat in their assessments for the first time in a year.
Despite signaling upbeat growth projections, service providers lowered headcounts in August. But the rate of job shedding was the weakest since January.
Outstanding business volumes decreased halfway through the second quarter of FY22. Although moderate, the pace of depletion was the most pronounced since April 2020. Service providers indicated that higher fuel, retail and transport prices pushed up their expenses in August. Overall input costs increased at the strongest rate in four months and outpaced its long-run average. Charges levied by services companies increased in August, but rate of inflation softened to the weakest since March.
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