Economic Buzz: India composite PMI rise sharply to 63.2 in August

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.

Concurrently, 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. Amid reports of higher salaries awarded to workers and overtime payments, business expenses rose further. The rate of inflation quickened to a nine-month high. Meanwhile, demand buoyancy facilitated the steepest increase in output charges since July 2012.

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. Demand buoyancy, efficiency gains and greater inflows of new business were some of the reasons firms gave for the upturn.

August data highlighted a broad-based pick-up in growth of output across India's manufacturing and service sectors. Subsequently, the HSBC India Composite PMI Output Index rose from 61.1 in July to 63.2 in August, indicating the sharpest pace of expansion in over 17 years.

This acceleration was supported by strengthening growth of new business intakes, which reached its highest rate since mid-2010. On this front, however, only service providers registered a faster increase.

Aggregate employment rose at a solid rate that was more pronounced than in July. Growth in the manufacturing industry broadly stabilised, while services firms signalled a quicker increase.

Aggregate employment rose at a solid rate that was more pronounced than in July. Growth in the manufacturing industry continued at a solid pace, while services firms signalled a quicker increase.

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