India's services PMI reached an impressive 62.3 in July, marking its highest level since June 2010, according to data released by S&P Global on August 3. The surge in services activity was significant, rising from a Purchasing Managers' Index (PMI) of 58.5 in June to the current 62.3.
The dominant services sector in India experienced its fastest growth since June 2010, as overall total sales showed a substantial increase, as indicated in the PMI data released on Thursday. The PMI has remained consistently above the 50-mark, indicating expansion and growth, for two years now. This notable rise was attributed to the strength in demand and new business gains, as noted in the S&P Global study.
The PMI is based on a survey that collects responses from around 400 service companies across various sectors, including non-retail consumer services, transport, information, communication, finance, insurance, real estate, and business services. The spike in PMI was primarily driven by a pickup in international sales.
Notably, service providers reported the second-fastest increase in new export orders since the series started in September 2014. Key sources of growth were identified as Bangladesh, Nepal, Sri Lanka, and the UAE, according to S&P Global.
The Finance & Insurance sector stood out as the brightest spot in terms of business activity and new orders, ranking at the top of the growth rankings in both instances, as highlighted in the S&P report.
Pollyanna De Lima, Economics associate director at S&P Global Market Intelligence, emphasized the vital role of the service sector in fueling India's economy. The PMI results for July suggest a notable contribution from the sector to the overall GDP for the second fiscal quarter.
Examining PMI price indices in recent months, it becomes evident that competitive advantage continues to drive demand for Indian services, with output prices seeing only modest increases compared to several other nations. In July, input cost inflation ticked higher, but service providers remained cautious in their price-setting decisions to avoid deterring sales, as pointed out by De Lima.
However, the overall level of positive sentiment slipped from June's six-month high, mainly due to concerns surrounding extreme weather, according to the report's cautionary note.
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