Reserve Bank Of India or RBI stated in a latest update that service sector firms retained positive assessment about their overall business situation, turnover and employment position in Q2:2024-25 with somewhat lower sanguinity vis-?-vis the previous quarter. Pressures emanating from cost of finance, input prices and wages witnessed moderation. Sentiments on growth in selling prices and profit margins moderated but remained positive. Respondents remained highly optimistic on demand conditions in Q3:2024-25, though their optimism regarding overall business situation and job landscape stood lower vis-?-vis the previous quarter.
Pressures emanating from input costs and finance costs are likely to continue during Q3:2024-25; pressures stemming from salary outgo are, however, expected to ease. Selling prices and profit margins are expected to record lower growth in Q3:2024-25. As far as the expectations for Q4:2024-25 and Q1:2025-26 are concerned, overall business situation is expected to improve and firms remain highly optimistic on turnover and employment. Input cost pressures are likely to persist though and growth in selling prices is in sync with it.
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