India's vast service sector had a huge revival in July

Photo by Phil Walter/Getty Images

After contracting for two months, India’s massive services sector returned to growth in July with the Nikkei-Markit PMI gauge rising to 50.8.

The reading, well above the 47.7 level of June, marks expansion in activity for the first time since April.

Here’s Markit on the key findings from July’s report:

“Services activity rose primarily in response to a renewed increase in new business, with panellists commenting on strengthening demand conditions. Although growing for the first time in three months, the expansion in new business was slight.”

Along with new orders rising, employment rose at the fastest pace in two years, while order backlogs declined at the quickest rate since February 2014.

Elsewhere input and output prices rose modestly, indicating that price pressures are once again accelerating having troughed earlier in the year.

Despite activity and new orders expanding modestly, confidence among firms deteriorated sharply, hitting a survey low.

While firms saw favourable government policies and upcoming new project starts as factors that would likely support growth in the next 12 months, they were more than offset by concerns surrounding future economic conditions and competitive pressures.

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