India services sector growth hits 10-month high as demand surges, PMI shows

India's services sector enjoyed its strongest growth in ten months in June, fuelled by robust demand and cooling price pressures, a survey showed on Thursday. The HSBC final India Services Purchasing Managers' Index (PMI), compiled by S&P Global, climbed to 60.4 in June from 58.8 in May, but was a touch lower than a preliminary estimate of 60.7. The PMI threshold of 50.0 separates growth in activity from contraction. The new business sub-index - a key gauge of demand - rose sharply as companies benefited from sustained strength in the domestic market. This came alongside robust growth in export orders even as the pace slowed slightly from May. Overseas demand was underpinned by improvement from the Asian, Middle Eastern and U.S. markets, according to panelists. The strong demand supported continued job creation although employment growth eased from the record-high touched in May. On the pricing front, input cost inflation across the sector cooled to a ten-month low in June with companies primarily citing higher staff wages as the main source of increased expenses. Service providers maintained enough pricing power to pass some of the cost burden to clients. Output price inflation eased from May and was in line with the historical average. However, the business outlook for the coming year weakened to its lowest level in more than two years. The HSBC India Composite PMI, which combines services and manufacturing activity, rose to 61.0 in June from 59.3, marking the fastest expansion in 14 months. The manufacturing PMI data released this week showed factory activity growth accelerated in June, complementing the robust services performance.