India’s leading services sector picked up modestly in August, but consistently weak new orders kept overall activity close to its lowest level in more than four years, a survey found, even as companies increased hiring at the fastest rate in over a year.
HSBC's India Services Purchasing Managers' Index (PMI), prepared by S&P Global, increased to 54.1 in August from 53.3 in July, though it came in marginally below the earlier flash estimate of 54.5.
A PMI above 50.0 signals expansion in activity.
However, the headline figure remained slightly below its long-term average. New business, the survey’s main gauge of demand, rose at the second-slowest rate in more than four years.
Overseas demand provided little additional support, as new export orders increased at roughly the same pace as in July.
On the labour side, services companies increased hiring at the quickest pace in 15 months, indicating that some confidence persists.
However, overall business sentiment remained below its long-term average for the second consecutive month, even though firms were cautiously optimistic that market conditions and demand would pick up.
Asia's third-largest economy is projected to expand by 6.7% in the current fiscal year, weighed down by elevated oil prices and a depreciating rupee, marking a deceleration from the robust 7.8% growth recorded in the previous quarter.
Cost pressures rose modestly. Prices charged to clients increased at the quickest pace since March as firms passed on higher operating expenses.
India’s Composite PMI, which combines services and manufacturing, held steady at 54.3. A stronger expansion in services was needed to keep the composite unchanged because manufacturing growth slipped to its lowest level in five years.
