Due to solid demand growth and ongoing cost pressure relief, the primary services sector expanded faster than anticipated in August, spurring businesses to hire at the most rapid rate in more than 14 years, according to a private study.
During the April to June quarter, Asia's third-largest economy increased at its highest annual pace in a year, driven by strong expansion in services and manufacturing activities.
The economy faces significant threats from rising interest rates, increased pricing pressures, and growing worries about a global recession, so it is unlikely that this momentum will last over the upcoming quarters.
Nevertheless, the S&P Global India Services Purchasing Managers' Index increased from 55.5 in July to 57.2 in August, exceeding the 55.0 projection in a Reuters poll.
It remained above the 50-mark separating growth from contraction for a 13th straight month." The pick-up in growth stemmed from a rebound in new business gains as firms continued to benefit from the lifting of COVID-19 restrictions and ongoing marketing efforts," noted Pollyanna De Lima, associate economics director at S&P Global.
The service sector's financial and insurance industries led the way in terms of sales and output growth in August.
As a result, businesses increased headcount at the most robust rate since June 2008, and indicators of a stable demand environment increased company confidence to its most significant level in over four years.
However, ongoing weakness in the worldwide demand led to a 30th consecutive month of declines in overseas orders.
Despite being high, input costs rose in August at their slowest rate in almost a year. Due to the demand's ongoing strength, businesses were able to put part of the burden of their high costs on their customers.
While it is anticipated that overall inflation will drop during the upcoming months, it is unlikely that it will ever reach the Reserve Bank of India's medium-term target range of 2%-6%.
That indicates that the RBI is anticipated to keep raising rates despite having already increased its benchmark repo rate by 140 basis points since May.
The composite index increased to 58.2 in August from 56.6 in July due to a faster expansion of services activity and robust manufacturing growth.