Rising from 58.9 in May to 59.2 in June, S&P Global India Services SMEs the entrepreneurial activity index reached its highest level since April 2011 and marked a strong rate of increase. The acceleration of growth was generalized in the four monitored subsectors. According to panel members, the recovery stemmed from continued improvement in demand as a result of the backwardness of pandemic restrictions, expansion of capacity and a favorable economic environment. The survey is made up of responses to questionnaires sent to a panel of about 400 companies in the service sector.
While companies expect the recovery to be sustained over 12 months, concerns about price pressures have limited business confidence. According to the survey, input costs continued to grow at a historically high pace, albeit the slowest in three months, while tariff inflation peaked in nearly five years. The vital services sector was hit hard by the Covid-19 pandemic waves as brakes imposed to prevent the spread of the deadly virus closed shopping malls, hotels, restaurants and damaged tourism and travel.
“Consumer services had the strongest increases in both production and new orders in June, but growth rates increased across the board. Cost pressure in the services economy remained stubbornly high in June, despite has dropped to a three-month low. With companies holding significant prices in power, due to robust demand conditions, production tax inflation has risen to a nearly five-year high, “he said. Pollyanna De Limaassociate director of economics at S&P Global Market Intelligence.
Service companies saw a substantial increase in hiring new jobs at the end of the first fiscal quarter, with the rate of increase improving to the best in over 11 years.
The companies were able to secure new orders despite charging more for their services. Data for June showed the fastest rise in sales prices since July 2017 as several companies tried to pass on some of their additional cost burdens to customers.
Unstoppable inflation continued to worry businesses.
“The leap in the services PMI corroborates our view that the services sector will lead the recovery of growth in fiscal 2023. Upper middle-income households are likely to prioritize spending on contact-intensive services , which were avoided during the pandemic, at the cost of consumer durables. This is likely to result in a slower improvement in capacity utilization levels, slightly delaying private sector investment plans amid global hardship and l ‘rising commodity prices,’ he said Aditi Nayarchief economist at a rating agency ICRA.