News Brief

India's Services Sector Growth Rises In June With Strong Demand And Record Export Orders — All About It

Kuldeep Negi

Jul 03, 2024, 11:51 AM | Updated 11:51 AM IST

Services sector. (Representative Image)
Services sector. (Representative Image)

India's services sector experienced accelerated growth last month, driven by robust demand and a record rise in export orders, according to a business survey.

The companies also reported the fastest hiring rate in nearly two years.

The HSBC India Services Purchasing Managers' Index, compiled by S&P Global, climbed to 60.5 in June from 60.2 in May, news agency Reuters reported.

This figure closely matched the Reuters poll median forecast of 60.6 and a preliminary reading of 60.4.

It has been above 50, which separates growth from contraction, for nearly three years.

The survey indicated that new business, a critical demand indicator, has remained above the breakeven point since August 2021, expanding at a faster rate last month.

This growth was supported by the fastest increase in international orders since the survey introduced the sub-index nearly a decade ago.

That is good news for India's economic outlook, already the seventh largest services exporting country globally, according to the Reserve Bank of India.

India's economy, the third largest in Asia, achieved a better-than-expected growth rate of 7.8 per cent in the January-March quarter. However, a Reuters poll suggested that the growth rate might slow slightly this fiscal year.

The strong demand environment prompted service providers to increase their workforce. The hiring rate in June was the highest since August 2022, marking over two years of continuous job growth.

Despite this positive trend, overall sentiment for the year ahead dipped to an 11-month low, reflecting concerns about market uncertainty and competition.

The survey also showed that cost pressures eased, with costs rising at the slowest rate in four months. Fewer than 5 per cent of firms passed these costs on to clients, resulting in moderate inflation in service charges.

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Kuldeep is Senior Editor (Newsroom) at Swarajya. He tweets at @kaydnegi.

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