Services industry posts modest growth in July after two months of contraction

Source: Economic Times

The services industry in India posted a modest growth in July, reversing two months of contraction, a private survey showed.

The Nikkei Services Purchasing Managers’ Index (PMI) rose to 50.8 in July compared with 47.7 in June. A reading above 50 on this survey-based index indicates expansion. “While it was welcome news to see a return to growth of activity in the Indian service sector during July, we are still looking at a modest improvement at best,” said Andrew Harker, senior economist at Markit.

Markit compiles this index.

The composite PMI, which combines manufacturing and services sector responses, rose to 52 in July from 49.2 in June, indicating modestly better economic activity. The manufacturing PMI was at a six-month high in July. The survey results made a case for monetary easing. “When looking at the manufacturing and service sectors together, weak inflationary pressures and modest growth tend to support a more accommodative monetary policy environment,” Harker said.

More new work allowed Indian service providers to hire more, the survey said. The rate of jobs creation was quickest in two years. The sub-index for employment rose to 51.4 in July from 50.4 in June. Though services companies raised tariffs in July to counter cost pressures, the rate of increase was the weakest since April.

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