While the index reflects sustained growth in services activity, analysts note that corporate profits remain under pressure, posing a concern for mid-term performance. The latest data shows a faster overall increase in new orders, with a significant surge in new export business serving as a key driver of operational activity.
Improved sales have led to a rise in backlogged work. However, companies continue to reduce staff, indicating efforts to control costs. Market analysts suggest that new business growth benefits from steady domestic demand and a recovering external market. Yet, slower increases in input prices have prevented firms from fully passing costs onto customers, pushing service prices back into contraction and further squeezing profit margins.
Despite the short-term PMI rebound supporting business activity, ongoing profit pressures could weigh on medium- to long-term performance. Future attention should focus on price transmission efficiency and the actual strength of domestic demand to gauge the sustainability of the economic recovery.
Additionally, the composite PMI for August rose to 51.9, up from 50.8 in July. Production and business activities expanded broadly, with faster growth in new business volumes, a slower decline in exports, rising backlogs, and improved business optimism.
