Perspective on ISP Data Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
Below the Perspective on ISP Data by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
“The August 2026 ISP data indicated a broad-based expansion in services sector activity, with growth recorded across 17 of the 19 sectors. Based on the current framework, our estimates suggest that services output growth edged up to 14.0% y-o-y in August from 13.5% in July. The improvement was led by strong performance in trade, real estate, banking & insurance, and IT services. This was also reflected in the robust growth by services exports. The encouraging performance is consistent with the resilience and strong momentum visible in the broader economy, as reflected in indicators such as bank credit growth, GST collections, automobile sales and e-way bills. However, the air transport sector remained under pressure from ongoing geopolitical tensions and elevated energy prices, with output contracting for the fifth consecutive month.
Going forward, the services sector may face headwinds from an uncertain external environment, volatile energy prices, supply-chain frictions, and rising input costs. Segments such as trade and air transport could be impacted by higher energy prices. Consumer-facing segments such as accommodation & food services and transportation could face risks from emerging inflationary pressures, which may erode purchasing power and affect demand. These risks and their impact on services sector activity warrant close monitoring. Nevertheless, given the sustained strength in overall economic activity, we expect the services sector to retain its growth momentum in the months ahead.”
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