India's August services activity cools despite rise in new exports biz
The seasonally adjusted S&P Global India Services PMI Business Activity Index recorded an expansion in new business for the consecutive 25th month.
A value of above 50 denotes expansion. «Demand strength also fostered a heightened sense of optimism regarding the outlook, boding well for economic growth prospects,» De Lima said.
Strong services growth and capital spending pushed India's GDP growth to a four-quarter high of 7.8% in the first quarter of FY24, according to data released last week.
Rahul Bajoria, head of EM Asia (ex-China) Economics Research, Barclays, believes that the trend is likely to continue for the rest of the year, with services anchoring the FY24 growth.
«While domestic demand for services in Q2FY24, as seen in high-frequency indicators (such as airline passenger traffic, bank deposit growth, credit card loans) remains robust, some easing is seen in the rate of services exports as external demand remains weak,» Bajoria said.
Financial, real estate & professional services grew in double digits at 12.2% in Q1, whereas trade hotels, transport, communication and services related to broadcasting expanded 9.2%. Among the four sub-sectors of the PMI Services Index, finance & insurance led growth in both total new business and output in August.
Employment situation was better, as the rate of job increase was the fastest since November.
On the inflation front, output inflation rose at the joint quickest pace in nearly six years.
«Anecdotal evidence indicated that robust demand conditions facilitated the passing on of cost increases to clients,» the report said.
On the input front, inflation remained above output charges, as 400 surveyed companies suggested rising food, input and labour costs. «However,
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