India services activity picks up in August, job creation hits 15-Month high: PMI
India’s services economy regained some traction in August as stronger demand lifted business activity and new orders, while hiring accelerated to its fastest pace in 15 months, the latest HSBC India Services PMI survey showed.
Activity improves, though still below its long-run trend
The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 54.1 in August from 53.3 in July. Readings above 50 signal expansion. Despite the month-on-month improvement, overall momentum remained modest: August marked the second-weakest reading since March 2022 and sat a touch below the long-term average of 54.5.
New orders gain, but growth remains soft
New business inflows increased at a faster rate in August, supported by firmer customer demand and stepped-up marketing. Even so, the pace of expansion was the second-softest in almost four-and-a-half years, indicating that underlying demand conditions remain somewhat constrained. Some firms cited challenging market conditions and softer client interest in select service segments.
Resilient external demand
International sales continued to rise at a solid clip, broadly in line with July’s pace. Companies reported stronger demand from markets such as Australia, Brazil, Canada, Japan, Malaysia, Singapore, Sri Lanka, and the United Arab Emirates. That said, export growth was still below the average seen over the past year.
Hiring hits a 15-month high
Employment was a clear bright spot. Services providers expanded staffing at the quickest rate in 15 months, with roughly 11% of surveyed firms reporting higher headcount. Businesses linked increased hiring to efforts to enhance customer service, scale up sales operations, and support digital initiatives.
Backlogs ease for a second month
The volume of outstanding work fell marginally for the second consecutive month. Firms attributing lower backlogs pointed to softer new order inflows and the timely completion of existing projects.
Outlook steady but below average
Business confidence for the year ahead was broadly unchanged from July, though it remained below its long-term norm. Firms expect market conditions and client demand to improve over the next 12 months, with technology adoption and an anticipated rise in new enquiries cited as key supports for growth.
Costs moderate; selling prices rise faster
Input cost inflation edged up only slightly in August and stayed moderate by historical standards. Companies reported higher expenses on digital platforms, electricity, raw materials and other inputs, labour, marketing, and regulatory compliance. However, output charges rose at a quicker rate, with selling prices increasing at their fastest pace since March as firms passed on a greater share of operating costs to customers.
Composite picture unchanged
Across the broader private sector, the HSBC India Composite PMI Output Index—combining manufacturing and services—held steady at 54.3 in August, matching July’s level. This points to overall growth that is steady but not especially strong by past standards.
Bottom line
August’s data signal a services sector that regained some momentum, underpinned by stronger hiring and resilient external demand. Nonetheless, softer new-business growth and a still-subdued level of optimism underscore ongoing challenges relative to the sector’s long-run pace.
