India's services exports post fastest growth in 9 years

NEW DELHI: India's services activity continued to expand in August, though the purchasing managers' index or PMI services dropped to 60.1 in the month from the previous reading of 62.3 in July. However, the current month also witnessed the fastest rise in exports in the nine-year history of the series and elevated new order and output growth rates. Besides, new job creation was better, a private survey showed on Tuesday.

The PMI services index remained above the key level of 50 which separates expansion in activity from a contraction for 25 consecutive months. PMI is a survey indicator, which is based on the responses of around 400 service companies. The sectors it covers include non-retail consumer services, transport, information, communication, finance, insurance, real estate and business services.

However, the survey also showed that hiring activity across India's service economy continued to expand halfway through the second fiscal quarter. "The survey participants reported a blend of permanent and temporary staff recruitment on both part-and full-time bases. The rate of job creation was moderate, but the strongest seen since last November. Besides, capacity pressures at service providers ticked higher in August, evidenced by a stronger increase in work pending completion. That said, the rate of backlog accumulation was only slight," it showed.

Commenting on the survey, Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said that Indian services companies achieved a remarkable milestone in August, as they welcomed a series record surge in new export business. "Several regions contributed to the upturn, including Asia Pacific, Europe, North America and the Middle East," Lima said.

"This spike in international demand supported one of the best sales performances recorded over the past 13 years and acted as a catalyst for firms to expand their workforces and output. Demand strength also fostered a heightened sense of optimism regarding the outlook, boding well for economic growth prospects. However, favourable demand trends also led to the joint-fastest increase in prices charged for Indian services in over six years, which may prompt attention from policymakers and potentially delay cuts to the benchmark repo rate," Lima added.