FPJ New Service MUMBAI

The Indian service economy benefited from a substantial improvement in demand during August, which pushed growth of new orders and activity to their highest rates in over 15 years, according to a monthly survey compiled by S&P Global on Wednesday.

At the same time, the rise in international sales was the third-strongest since the series started in September 2014. Robust job creation in recent months meant that companies had sufficient capacity to cope with current requirements. Outstanding business increased only marginally, and there was a modest uptick in employment.

The seasonally adjusted HSBC India Services PMI Business Activity Index was up from 60.5 in July to 62.9 in August. This indicated the steepest rate of expansion since June 2010.“India’s services PMI Business Activity Index reached a fifteen-year high in August on the back of 

surging new orders. The broad-based expansion in international sales bolstered overall demand, which prompted Indian services firms to hire additional workers. Reflecting higher labour costs and robust demand conditions, both input and output prices increased substantially in August. Meanwhile, the composite PMI rose to a seventeen-year high of 63.2 in August, which indicated strong broad-based output growth in both the manufacturing and service sectors,” said Pranjul Bhandari, chief India economist at HSBC.

Demand buoyancy, efficiency gains and greater inflows of new business were some of the reasons firms gave for the upturn. Amid reports of higher salaries awarded to workers and overtime payments, business expenses rose further.