In July, service activity reaches a 13-year high

3 Aug 2023 , 03:21 AM

Service activity reached its highest point in 13 years as a result of strong demand and new orders that were encouraged by an uptick in overseas sales. According to information released on Thursday, the seasonally adjusted S&P Global India Services PMI Business Activity Index increased to 62.3 in July from 58.5 in June.

According to the PMI results for July so far, the service sector will likely make a significant contribution to overall GDP for the second fiscal quarter, underscoring the sector’s crucial role in boosting India’s economy, according to Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, who talked to ET.

A number greater than 50 indicates expansion.

Since September 2014, service orders have increased at the second-fastest rate, driven by demand from Bangladesh, Sri Lanka, Nepal, and the United Arab Emirates.

In view of the difficult global economic environment, De Lima remarked, ‘The broad increases in sales across the domestic and international markets are particularly welcome news.’

Experts have emphasized the importance of bolstering service activity in driving up GST collection as well as India’s consumer demand.

Despite the fact that the 400 service companies S&P polled reported a reduction in future expectations compared to June due to bad weather, most cited strong demand and marketing campaigns as reasons for maximizing for the year.

The job market performed moderately, with increases that were largely consistent with those of the previous two months.

In terms of inflation, service sector businesses had additional cost pressures due to higher food, labour, and transportation prices, which contributed to inflation climbing at its quickest rate in 13 months.

De Lima continued, ‘Despite a little increase in input cost inflation in July, service providers continued to be careful in establishing prices in an effort to maintain sales.

Consumer services saw the fastest increases in input inflation that businesses had to deal with, but the real estate and business services sectors saw the fastest increases in prices that consumers pay.

The sector with the best performance out of the four examined by S&P was finance and insurance.

Despite manufacturing activity figures released earlier this week showing a little drop, the success of the service sector helped India’s private sector activity reach a 13-year high in July.

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