India’s services sector activity remained in the growth territory for the second consecutive month in July, as business activity witnessed the strongest growth since October 2016, amid improved demand conditions, said a monthly survey.
The seasonally adjusted Nikkei India Services Business Activity Index rose from 52.6 in June to 54.2 in July, as new business rose at the fastest pace since June 2017.
A print above 50 means expansion.
“July data was encouraging as the service sector observed the best performance since October 2016, underpinned by the strongest gain in new orders since June 2017,” said Aashna Dodhia, Economist at IHS Markit, and author of the report.
Amid reports of improved demand conditions, business confidence towards the 12-month outlook picked up from June’s recent low. Subsequently, firms raised their staffing levels at the strongest pace since April. The Nikkei India Composite PMI Output Index, that maps both the manufacturing and services sectors, rose from 53.3 in June to 54.1 in July.
“Marked expansions in both the manufacturing and service sector, with stronger growth in the latter, powered the fastest improvement in overall operating conditions in the economy since October 2016,” Ms. Dodhia said. On prices, inflationary pressures remained marked during July.
‘Input costs higher’
“There are some warning signs reflected by PMI price data. Although overall input cost inflation softened from June’s near four-year high, service companies faced the fastest rise in input costs since March amid reports of high oil prices,” she said.
“An uncertain global climate, currency weakness and strong inflation may continue to place pressure on the central bank to hike interest rates over the coming months,” she added.