India's services growth picks up but stays near 4-year low
What's the story
India's services sector witnessed a minor uptick in August, according to the latest Purchasing Managers' Index (PMI) data from S&P Global. The HSBC India Services PMI rose to 54.1 in August from July's 53.3, indicating expansion despite new business growth remaining muted. However, the overall activity level is still near its weakest point in over four years.
Market dynamics
New business growth remains muted
The PMI's primary demand indicator, new business, grew at its second-slowest pace in over four years.
International demand provided little relief as new export orders grew at a broadly similar rate to July.
Services firms hired at their fastest rate in 15 months, indicating some confidence remains amid the uncertainty.
Future outlook
Business confidence remains low
Despite the hiring surge, business confidence remained below its long-run average for a second consecutive month.
Firms were cautiously hopeful that market conditions and demand would improve in the future.
A Reuters poll projected Asia's third-largest economy to grow by 6.7% this fiscal year, weighed down by high oil prices and a weak rupee, indicating a slowdown from last quarter's robust 7.8% growth rate.
Economic indicators
Cost pressures increase slightly
Cost pressures in India's services sector have increased slightly, with prices charged to clients rising at the fastest pace since March.
Firms are passing on higher operating expenses to their clients.
The Composite PMI, which combines services and manufacturing data, remained unchanged at 54.3 as a faster expansion in services was needed to offset a slowdown in manufacturing growth that hit a five-year low.