India’s Services Activity Improves in August, but Demand Remains Weak

India’s services sector recorded a modest improvement in activity in August, although weak new business kept growth close to its lowest level in more than four years, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) compiled by S&P Global.

The services PMI increased to 54.1 in August from 53.3 in July, though it was below the preliminary estimate of 54.5. A reading above 50 indicates that activity is expanding.

Demand remained a concern, with new business increasing at its second-slowest pace in more than four years. Growth in new export orders provided only limited support and remained broadly similar to July.

Despite softer demand, services companies increased hiring at their fastest pace in 15 months, indicating continued confidence among some businesses.

Business confidence remained below its long-term average for a second consecutive month. Companies nevertheless expressed cautious optimism that market conditions and demand could improve.

Cost pressures increased slightly during the month, while prices charged to clients rose at their fastest pace since March as companies passed on higher operating costs.

The broader Composite PMI, which combines services and manufacturing activity, remained unchanged at 54.3. Faster services growth offset a slowdown in manufacturing activity, which fell to a five-year low.