India's private sector activity expanded at the fastest pace in five months in August, as services activity rose at quicker pace, survey figures from Nikkei and Markit Economics showed Thursday.
The seasonally adjusted Nikkei Composite Output Index climbed to a five month high of 52.6 in August from 52.0 in the previous month. Any reading above 50 indicates expansion in the sector.
The services business activity index rose to 51.8 in August from 50.8 in the preceding month.
New business received by the Indian service sector increased further in August, driven by higher demand coupled with capacity improvements and increased marketing. However, the rate of expansion was moderate.
Meanwhile, manufacturing new work rose at a weaker pace than in July, growth nevertheless outpaced that seen at their services counterparts.
Employment level in the service sector remained unchanged in August, ending its three-month sequence of job creation. Manufacturing employment also showed no variations.
On the price front, input prices increased for the ninth straight month in August, though the rate of inflation was marginal. In contrast, cost burdens faced by manufacturers dropped during the month.
Higher input prices forced services firms to raise their selling prices further in August. As with the trend for costs, factory gate charges decreased. Across the private sector overall, charge inflation softened to the weakest since April.
"On the monetary-policy front, the Reserve Bank of India advocated a wait-and-see approach to setting the benchmark rate in August. With growth remaining relatively weak and survey evidence pointing to a lack of inflationary pressures across the country, further rate cuts are on the cards." Pollyanna De Lima, economist at Markit, said.
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