In June 2024, the HSBC India Services Business Activity Index rose to 60.5 from May’s 60.2.
This marked a significant rebound from the five-month low in May, driven by a surge in new orders and unprecedented growth in international sales.
According to the S & P Global report, new orders, both domestic and international, continued to increase sharply, extending nearly three years of consecutive growth. This upturn was fueled by record expansions in international orders from regions including Asia, Australia, Europe, Latin America, the Middle East, and the US.
The sector also saw the fastest pace of employment growth since August 2022. Service providers hired both short-term and permanent staff to support the rising volume of new work. The hiring was good across junior, medium, and senior levels.
Despite higher costs for food, fuel, and labor, the rate of inflation for service providers’ expenses was the weakest in four months. This resulted in a slower increase in selling prices, the mildest since February 2024. This moderation in cost pressures contributed to a more positive outlook for service providers, who remain optimistic about future business activity despite some concerns about market uncertainty and competition.
Key highlights of the Services PMI June 2024
New Orders
Strong growth in domestic and international new orders, continuing nearly three years of consecutive increases.
International Sales
Record expansion in orders from Asia, Australia, Europe, Latin America, the Middle East, and the US.
Employment Growth
Fastest employment growth since August 2022, with hires across all levels.
Cost Inflation
Moderate input cost rise, with the weakest inflation rate in four months.
Selling Prices
Slowest rise in selling prices since February 2024, improving service providers’ outlook.
Sector Confidence
The overall level of positive sentiment slipped to an 11-month low, owing to concerns surrounding market uncertainty and competition.
Pranjul Bhandari, Chief India Economist at HSBC, stated, “Activity growth in India’s service sector accelerated in June, led by an increase in both domestic and international new orders. This encouraged services firms to increase their staffing levels at the fastest pace since August 2022. Input costs rose at a moderate pace, resulting in a softer uptick in output charges.”
The PMI, an index ranging from 0 to 100, indicates expansion above 50, contraction below 50, and no change at 50.
The composite PMI, which includes both manufacturing and services, also showed a sharp expansion, rising from 60.5 in May to 60.9 in June. Manufacturing firms continued to lead this growth, contributing significantly to the overall increase in private sector activity.
