India’s Services Sector Surges to 14-Year High in August

India’s services sector has recorded unparalleled growth, achieving its fastest expansion in over 14 years. According to the latest HSBC PMI survey, India’s Services PMI Business Activity Index rose sharply to 62.9 in August, up from 60.5 in July. This marks the steepest rate of growth since June 2010, fueled by a robust increase in demand and business activities.

The HSBC report elaborates that the business activity index, which assesses month-on-month activity levels, underscores an exceptional growth trajectory unseen since mid-2010. The surge highlights significant domestic demand boosting new orders and overall activity to unparalleled heights in over 15 years.

The report further notes substantial improvements in international sales, contributing to one of the strongest export increases since September 2014. Consequently, companies expanded their workforce in response to this elevated demand. Meanwhile, costs have risen due to wage hikes and overtime payments, leading to an increase in input cost inflation, which has not been seen this high in nine months.

Despite rising costs, strong demand allowed businesses to elevate output prices, marking the most significant rise since July 2012. The broader private sector also mirrored this performance, as the HSBC India Composite PMI Output Index rose from 61.1 in July to 63.2 in August, showcasing the swiftest growth in over 17 years.

The data from August reveals robust advancements in both services and manufacturing sectors, with new business growth at its highest since mid-2010, though services outpaced manufacturing. Employment surged solidly across both sectors, underscoring India’s economic resilience bolstered by rising domestic demand, job creation, and broad-based growth within services and manufacturing sectors.