New Delhi: Showing a remarkable strength in the month of September, India's services sector rose to a 13-year high of 61 in the month as a positive national and international demand environment boosted intakes of new business and output volumes. Besides, job numbers also continued to increase at a historically high rate with workloads rising and capacities experiencing mild pressure, a private survey showed on Thursday.
As per the survey prepared by S&P Global's services Purchasing Managers' Index (PMI), the reading reached 61 in September, a slight increase from 60.1 in August, remaining consistently above the crucial 50-mark and indicating growth rather than contraction for an impressive 26 consecutive months. The index, however, fell to 60.1 in August from a record increase of 62.3 in July.
The survey also showed that services
firms retained positive expectations for activity, with sentiment improving to its highest level in over nine years. "A key feature of the latest results was the convergence of input cost inflation towards its long-run average. However, the slowest rise in expenses since March dampened the extent to which selling charges were lifted," the survey showed.
"Signalling a sharp upturn in output that was one of the strongest in over 13 years, the uptick meant that the index averaged 61.1 over the second fiscal quarter, above that seen in the prior three-month period (60.6). The September's expansion in output was commonly associated with effective marketing, favourable demand conditions and strong influxes of new business," it said.
Reacting to the survey, Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said, "The latest PMI results brought more positive news for India's service economy, with the September month seeing business activity and new work intakes rising to one of the greatest extents in over 13 years. Besides demand strength domestically, firms noted higher international sales to Asia, Europe and North America."
"Moreover, an upturn in business optimism about the year ahead, fuelled by buoyant demand conditions, bode well to further growth across the service sector. Unsurprisingly, job creation was sustained as the business mood improved. Services charges rose at a softer rate as cost pressures receded to one of the lowest in two-and-a-half years. Although the latter indicates that near-term output price inflation may cool, worries about potential fluctuations in food prices due to El Niño means the RBI is highly unlikely to cut rates until early next year," Lima added.
