📷 Image Credits: Moneycontrol
India’s services sector activity reached a robust 60.5 in June, rebounding from a slight dip in the previous month, according to a private survey released on July 3. The HSBC India Services Business Activity Index has been above the 60-mark since the beginning of the year, indicating a consistent growth trend. The uptick in activity was driven by a surge in new orders and an expansion in international sales.
Pranjul Bhandari, the Chief India Economist at HSBC, noted that the acceleration in service sector growth in June was fueled by an increase in both domestic and international orders. This growth in demand also prompted companies to ramp up hiring, with employment generation reaching the highest level in nearly two years.
While the increased hiring activity led to a rise in labor costs for firms, the report mentioned that input inflation softened to a four-month low. Despite the rise in costs, only a small percentage of service providers passed on the increased expenses to clients, resulting in a moderate rate of charge inflation.
Looking ahead, service providers remain relatively optimistic about the future business outlook, although the level of optimism saw a decline to an 11-month low in June. This decrease in sentiment was attributed to concerns surrounding market uncertainty and rising competition.
The survey, which included responses from 400 services firms, highlighted a notable increase in export orders, particularly from regions like Asia, Australia, Europe, Latin America, the Middle East, and the US. In line with this trend, India’s services exports witnessed a nearly 5 percent growth in the fiscal year 2023-24, totaling $341.1 billion.
As the services sector continues to play a significant role in India’s economic landscape, experts like IMF Chief Economist Pierre-Olivier Gourinchas predict that the country’s services exports will serve as a buffer for the economy in an increasingly fragmented global market. With the government aiming for services exports to reach $1 trillion by 2030, the sector’s resilience and growth potential remain a key focus for policymakers and industry stakeholders.
