India Services PMI At Highest Mark In 11 Years; Inflation Concerns Dampen Business Confidence

India's services industry expanded at the fastest pace in over eleven years in June,as per the S&P Global India services PMI data. June data pointed to further accelerations in growth of new business and output at Indian services companies amid ongoing improvements in demand conditions. Although firms expect the recovery to be sustained over the coming 12 months, concerns surrounding price pressures restricted business confidence. Input costs continued to rise at a historically elevated pace, although one that was the slowest in three months, while charge inflation hit a near five-year high.

Rising from 58.9 in May to 59.2 in June, the seasonally adjusted S&P Global India Services PMI Business Activity Index was at its highest mark since April 2011 and signalled a steep rate of increase. Moreover, the acceleration in growth was broad-based across the four monitored sub-sectors. Services firms noted a substantial upturn in new work intakes at the end of the first fiscal quarter, with the rate of increase improving to the best in over 11 years.

Unrelenting inflation continued to concern businesses, who were cautiously optimistic about the year-ahead outlook for business activity. The overall level of sentiment was well below its long-run average as only 9% of companies forecast output growth.

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