PMI New Delhi/UNI: India's services sector expanded at a record pace in July 2023 on the back of strong demand and new business gains.
The monthly survey carried out by S&P Global showed India's services purchasing managers’ index (PMI) accelerated to 62.3 in July this year as compared to 58.5 in the previous month, signalling the sharpest increase in activities since June 2020.
A reading below 50 shows contraction, while a reading above it means expansion.
"The upturn was largely attributed to demand strength and new business gains," the survey said on Thursday.
S&P Global said that cost pressures intensified during July, though charges were raised to a lesser extent as firms were cautious about their pricing strategies.
"Looking ahead, companies continued to predict higher activity levels. That said, concerns over extreme weather somewhat dampened optimism," it said.
The S&P Global India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate, and business services.
As per the survey, demand for Indian services improved to the greatest extent in over 13 years during July, with around 29% of survey participants reporting higher intakes of new business.
The upturn in total new orders was boosted by a pick-up in international sales.
Service providers noted the second-fastest increase in new export orders since the series started in September 2014. According to panellists, Bangladesh, Nepal, Sri Lanka, and the UAE were key sources of growth.
The survey said that July data signalled a further increase in input costs facing Indian service providers. Moreover, the rate of inflation quickened to a 13-month high, and monitored companies signalled greater food, labour, and transportation costs.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said, ""The resilience of the service sector underscores its vital role in fueling India's economy, with the PMI results for July so far pointing to a notable contribution from the sector to overall GDP for the second fiscal quarter."
De Lima further said that the broad increases in sales across the domestic and international markets are particularly welcome news, especially in light of the challenging global economic scenario.
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