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The
data reflected sustained growth in the private sector, which
according to the government's first budget since the national
election will get incentives to improve skills and spur
employment.
HSBC's flash India composite purchasing managers' index,
compiled by S&P Global, rose to 61.4 this month from June's
final reading of 60.9, marking three years of expansion. The
50-level separates growth from contraction.
"The Flash Composite Output Index signaled continued robust
growth in India's private sector," noted Pranjul Bhandari, chief
India economist at HSBC.
"The rise in output in July was led by a further increase in
business activity in the manufacturing sector, while the pace of
expansion in services output also accelerated and remained well
above its long-run average."
Overall expansion was led by the dominant services industry,
whose PMI rose to a four-month high of 61.1 this month from 60.5
in June. Growth in manufacturing was also robust, and the
factory PMI increased to 58.5 from 58.3 - its highest since
April.
The report said favorable market conditions, buoyant client
appetite and enhanced technology helped the improvement in
private sector activity. Both new business in the services
industry and manufacturing orders remained robust.
Job creation rose at the fastest pace since April 2006,
supporting overall business confidence at the start of this
quarter, which eased to a seven-month low in June.
"Companies turned more optimistic in July, following a
moderation in business confidence in June," added Bhandari.
"We note that the rate of input cost inflation continued to
trend higher in both sectors, which has driven firms to keep
raising sales prices."
Meanwhile, prices charged rose at the steepest pace in over 11
years but robust demand allowed firms to pass on lofty input
costs from high material, transportation and labour prices, to
their clients.
Higher prices could cloud the Reserve Bank of India's interest
rate outlook, which is focused on returning inflation to its 4%
medium term target. The central bank is currently expected to
cut its key policy rate next quarter.
(Reporting by Anant Chandak; Editing by Sam Holmes)
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