India’s services growth picks up in August but stays near four-year low, PMI shows

India's services sector showed a marginal improvement in August, yet overall activity remained near its lowest level in over four years, according to a survey. The HSBC's India Services Purchasing Managers' Index (PMI), calculated by S&P Global, climbed to 54.1 in August from July's 53.3, but fell slightly short of a preliminary forecast of 54.5. A PMI above 50.0 indicates expansion in the sector.

However, new business - the main demand indicator - expanded at the second slowest pace in over four years. International demand provided limited support, as new export orders grew at a rate similar to the previous month. While services firms increased hiring at the fastest pace in 15 months, confidence remained below its long-run average for a second consecutive month, though firms expressed cautious optimism that market conditions and demand would improve.

The Reuters poll suggested India's economy grew 6.7% this fiscal year, slowed by high oil prices and a weakening rupee, compared to a robust 7.8% growth in the previous quarter. Cost pressures increased marginally, with client prices rising at the fastest rate since March as firms passed on higher operating expenses. India's Composite PMI, which merges services and manufacturing, remained unchanged at 54.3, highlighting a need for stronger services growth to keep the composite steady, as manufacturing growth declined to a five-year low.