India's Services PMI Rises To 60.5 In June

In June, India's service growth expanded at a faster pace, up from May's five-month low, amid a strong rise in new orders and an unprecedented expansion in international sales, a private survey showed.

Rising from 60.2 in May to 60.5 in June, the HSBC India Services PMI pointed to an expansion in output. A print above 50 indicates expansion. Demand strength and rising intakes of new business were cited as the key determinants of growth. New orders received by Indian service providers continued to increase in June.

The HSBC India Composite Output Index recovered from 60.5 in the previous month to 60.9, highlighting a sharp rate of expansion that was considerably above the long-run series average. Manufacturing led the rise for the fifth straight month.

For services, supporting the upturn in total new business was a record expansion in international orders. Positive client appetite encouraged service providers in India to recruit additional staff at the end of the first fiscal quarter. The rate of job creation reached its peak in 22 months.

Additional recruitment added to firms' labour expenses and contributed to another increase in average cost burdens. Panellists also reported higher prices for food and fuel. However, the average input prices rose at a below-trend rate, which was the softest in four months. Fewer than 5% of service companies opted to share additional cost burdens with their clients by lifting selling prices in June, resulting in only a moderate rate of charge inflation.

Service providers remained confident that business activity would rise over the next 12 months, with nearly 23% of panelists expressing optimism. That said, the overall level of positive sentiment slipped to an 11-month low, owing to concerns surrounding market uncertainty and competition.