Services activity at three-month high in May
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New Delhi: India's services activity rose to a three-month high of 58.8 in May, slightly above 58.7 in April, driven by strong demand, new client acquisition and increased staffing capacity, according to a private survey released on Wednesday. The HSBC India Services Business Activity Index was at 60.2 in May 2024.The Purchasing Managers' Index reading in May was broadly in line with the steady readings from recent months, said Pranjul Bhandari, India chief economist at HSBC.New orders or sales rose at a sharp pace in May due to advertising, healthy demand and repeat orders from existing clients, according to the survey respondents.Export orders also picked up, recording the fastest increase in 19.5 years. The major drivers of this growth were Asia, Europe and North America."Strong international demand continued to fuel services activity, as evidenced by the new export business index's uptick from April," said Bhandari.Higher demand led to an increase in employment. "To keep up with swelling demand, India's service providers heavily increased staff recruitment," noted Bhandari.The rate of job creation was the highest in the history of the survey."Almost 16% of panel members reported higher payroll numbers, while 1% indicated a fall," the survey said. On the cost front, companies noted an increase in inflation, which was the highest since the start of the calendar year. Services charges also picked up. "Price pressures continued to intensify with input prices and charged prices both rising last month," said Bhandari.Business sentiment among service firms improved from April's 23-month low. Survey respondents cited greater staffing capacity, expanded clientele and marketing initiatives as drivers of growth in the year ahead.However, overall private sector activity in India eased marginally in May, with the HSBC India Composite PMI Output Index at 59.3, down from 59.7 in April.
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