(Photo : Pixabay)

The service sector in India grew at the fastest rate since March in August, with the Purchasing Managers' Index hitting 60.9, compared to 60.3 in July. 

According to the India HSBC PMI report, compiled by S&P Global, this growth was driven by stronger expansion in business activity and increased work orders. 

"The Composite PMI for India continued to show strong growth in August, driven by accelerated business activity in the service sector, which experienced its fastest expansion since March. This growth was largely fuelled by an increase in new orders, particularly domestic orders," said Pranjul Bhandari, Chief India Economist at HSBC.

Employment Level Remains Robust

According to the report, payroll numbers rose solidly in August as companies remained upbeat regarding the economic outlook. 

Another positive development in August included a slowdown in output charge inflation, which was helped by cost pressures retreating to their lowest in four years.

"Employment levels remained robust, though there was a slight decrease in the pace of hiring compared to July. On a positive note, input costs rose at their slowest pace in six months, with both the manufacturing and service sectors exhibiting the same pattern. Consequently, output price inflation receded in August," added Bhandari. 

Growth driven by finance and insurance sector

The report pointed out that the finance and insurance sub-sector was the best-performing area of India's service economy regarding both output and new business.

Out of the four sub-sectors tracked by the survey, consumer services sector posted the sharpest increase in input costs during August. Charge inflation was led by the transport, information and communication industries.

"However, the outlook for the Indian private sector over the next year has moderated, reaching its lowest level in 15 months due to competitive pressure, although the Future Output Index remained above the long-term average," concluded Bhandari.