India's services sector surges to 15-year high in August
What's the story
India's services sector witnessed a major spike in August, hitting a 15-year high. The surge was driven by strong demand, which also resulted in the fastest price rise in over a decade. The HSBC India Services Purchasing Managers Index (PMI), compiled by S&P Global, rose to 62.9 last month from July's reading of 60.5, indicating strong growth momentum across the sector.
Demand boost
Surge in new business, export orders drives growth
The surge in India's services sector was largely driven by a spike in new business, a key demand indicator. The expansion rate was the fastest since June 2010, backed by rising international demand. Export orders recorded their strongest growth in 14 months, further contributing to the overall growth of the sector.
Inflation impact
Rising costs passed on to customers more aggressively
The surge in demand has allowed firms to pass on rising costs to customers more aggressively. Output price inflation hit its highest level since July 2012, while input costs rose at the fastest pace in nine months. These growing price pressures could signal that overall inflation, which fell to an eight-year low of 1.55% in July, may soon start rising again.
Confidence boost
Business confidence improves
Business confidence for the coming year improved to a three-month high, with companies citing planned advertising spending and positive demand forecasts. It's worth noting that employment growth remained relatively modest during this period. Despite the modest job growth, the Composite PMI, which combines services and manufacturing sectors rose to a 17-year high of 63.2 in August from July's reading of 61.1.