August Service PMI falls to 52.4 from year-high

After hitting a year-high in the month of July, the rate of expansion in the services sector activity has softened in the month of August. The IHS Markit India Services Business Activity Index has declined from 53.8 in July to 52.4 in August, indicating a slower rate of increase in output.

The survey found that the companies that signalled growth commented on favourable government policies, improved technology and new business gains. However, growth was sustained in four of the five monitored sub-sectors, the sole exception being Real Estate & Business Services.

The survey also indicated that the  increase  in  new  export  orders remained  stronger  than  that  seen  for  total  new  work.  Survey participants indicated that advertising efforts boosted international sales in August.

Meanwhile, considering the ongoing  increases  in  new  work  and  upbeat  growth  projections,  the firms had hired  additional  workers  in  August, that led to job creation, with the  pace  of  expansion  remaining  above  its  long-run  average but lower than the rate in July.

Weak sales have dampened manufacturing sector activity in August, as shown by the Manufacturing PMI data that came in at 15-month low of 51.4.

The services and the manufacturing PMI data shows that the business conditions continue to remain dampened even though the sentiments are positive. It is speculated that the festive season along with slew of measures announced by the government will boost the business sentiments further.