The S&P Global PMI survey for India's services sector shows conditions remained very strong in July, with the survey's main business activity index advancing to an eleven-month high of 60.5 from 60.4 in June. This is above the flash estimate of 59.8. The manufacturing sector PMI, published last week, also showed an increase in its headline index. The composite index covering both sectors was unchanged at 61.0 in July, above the flash estimate of 60.7.

Respondents to the service sector survey reported output, new orders, and new export orders all grew at a strong pace in July, but payrolls were reported to have risen only slightly after several months of strong hiring. The survey's measure of confidence about the outlook for growth picked up in July, with respondents citing several factors to justify optimism. Respondents also reported a bigger increase in both input costs and selling prices.

The Services Purchasing Managers' Index (PMI) is a joint publication by Markit and the Nikkei media organisation and provides an estimate of business activity in private sector services for the previous month by using information obtained from a representative sector survey incorporating around 800 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting).

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the Markit PMIs, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the report shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the diffusion index. This index is the sum of the positive responses plus a half of those responding the same.

The Purchasing Managers' Index (PMI) survey methodology has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.