India's Services activity expanded at a sharper pace in August, but overall private sector growth was little changed, according to the HSBC India Services PMI release.The HSBC India Composite Output Index posted 54.3 in August, broadly unchanged from the July reading and pointing to a further improvement in the Indian private sector activity. The rate of increase was marked, and the slowest in four months.

After adjusting for seasonal factors, the headline HSBC Services Business Activity Index - which is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago - posted 55.0 in August, up from 54.2 in July. Meanwhile, manufacturing companies signalled a solid increase in production, but the slowest since November 2011 as short supply of power negatively affected production.

"Private sector companies in India signalled a further rise in new orders during August. The pace of increase was marked and the same as that recorded in July. The volume of new total business expanded faster at service providers as power shortages continued to impact negatively on manufacturers, it was reported.
Staffing levels were increased in the Indian private sector in August. The pace of expansion was modest at services firms, but job creation at manufacturers was the fastest in the series history," the HSBC PMI release for August has stated.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said:

"The service sector continues to demonstrate resilience with activity picking up pace in August. Moreover, growth in new orders and employment are also on the rise. Encouragingly inflation readings eased again, but higher wage costs and solid demand are keeping inflation pressures firm. With inflation risks still lingering, partly on the back of deficient monsoons, and policy inaction from Delhi persisting, the RBI has little room and appetite for rate cuts."

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