The seasonally adjusted Nikkei Services Business Activity Index, climed back above the 50-level, albeit slightly, at 50.3 in July compared to 47.7 in June, indicating a modest increase in performance of the services sector.
India's service sector output and new business orders received by the services firms increased for the first time in three months, albeit marginally, in July, a report by Nikkei said.
The seasonally adjusted Nikkei Services Business Activity Index, climed back above the 50-level, albeit slightly, at 50.3 in July compared to 47.7 in June, indicating a modest increase in performance of the services sector. If the index is below 50, indicates contraction, while above 50 indicates growth.
The report says that the rise in services PMI was aided by new business orders on the back of strengthening demand.
New business orders also led to an uptick in job creation, which although only slight, accelerated at the quickest pace in two years. New jobs also let the backlog of work to decline for the first time since February 2014.
The report said that services companies' input cost rose marginally in the month, mostly on the back of fuel, transportation and staff salaries.
The Business Expectations Index, however, was down to a new survey low in July, dragged down by an uncertain economic outlook. Companies are concerned about competitive pressures, and those expecting a rise in activity said that it will be on the back of marketing strategies, favourable government policies and upcoming new project starts, the survey stated.
Andrew Harker, senior economist at Markit, said, “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. The same could also be said for employment, which increased at the fastest pace for two years, but only slightly. Moreover, uncertainty around the future path of the economy has led confidence to slip to a record low.
“Inflationary pressures remained muted during the month, with companies actually raising their output prices at a slower pace than in June."
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