Hiring In Services Sector Fastest In 18 Years, Business Activity Growth Rate At Three-Month-High

India's business activity has surged in July, achieving its fastest growth rate in three months due to strong demand, particularly in the services sector.

A recent survey has also revealed that companies hired at the fastest pace in over 18 years, according to a report from The Hindu.

The data indicated sustained growth in the private sector, which the central government's Union Budget has aimed to boost through incentives for skill improvement and job creation.

The HSBC flash India composite purchasing managers' index, compiled by S&P Global, rose to 61.4 in July from June's final reading of 60.9, marking three years of expansion where a reading above 50 indicates growth.

Growth was primarily led by the services industry, with its PMI reaching a four-month high of 61.1 in July, up from 60.5 in June.

Manufacturing also saw significant growth, with the factory PMI rising to 58.5 from 58.3, its highest level since April.

The report highlighted favourable market conditions, strong client demand, and enhanced technology as key factors contributing to the improvement in private sector activity. Both new business activity in the services industry and manufacturing orders remained robust.

Prices charged increased at the steepest rate in over 11 years, but strong demand allowed firms to pass on high input costs from materials, transportation, and labour to their clients.

Higher prices could affect the Reserve Bank of India's interest rate outlook, which aims to bring inflation back to its 4 per cent medium-term target. The central bank is expected to cut its key policy rate next quarter.