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With stronger gains in new business, ongoing improvements in demand, job creation and overtime work, India’s services sector activity witnessed a sharp improvement in the month of August. The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from July’s four-month low of 55.5 to 57.2 in August, amid a quicker upturn in business activity and the sharpest rise in employment for over 14 years. This is thirteenth straight month when the services sector witnessed an expansion in output. In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

As per the S&P Global report, services companies expect output growth over the coming 12 months, with sentiment rising to its highest level in over four years. Optimism was centred on forecasts of ongoing improvements in demand and planned marketing. The combination of strong sales and upbeat growth projections underpinned a substantial increase in payroll numbers across the service sector. The rate of job creation picked up to the strongest in over 14 years. Employment trends improved in each of the four monitored sub-sectors.

Besides, the S&P Global India Composite PMI Output Index - which measures combined services and manufacturing output - rose from 56.6 to 58.2, indicating a sharp pace of expansion. New work intakes increased at quicker rates in the manufacturing and service sectors, leading to the fastest upturn at the composite level for nine months. Indian private sector jobs expanded to the greatest extent in over 14 years midway through the second fiscal quarter. The upturn was driven by a substantial acceleration in growth across the service economy, while manufacturers registered a broad stabilisation of payroll numbers.