India’s Services PMI Expands To 61 in September

India’s service sector growth strengthened in September as a positive demand environment boosted intakes of new business and output volumes, a private survey showed.

The seasonally adjusted S&P Global India Services PMI Business Activity Index stood at 61 in September compared with 60.1 in August, according to S&P Global. A print above 50 means expansion, while a number below 50 indicates contraction.

“The latest PMI results brought more positive news for India’s service economy, with September seeing business activity and new work intakes rising to one of the greatest extents in over 13 years,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

September’s expansion in output was commonly associated with effective marketing, favourable demand conditions, and strong influxes of new business, the survey showed. Anecdotal evidence indicated that market dynamics remained favourable, supporting demand. Advertising was also cited as a key factor in boosting sales.

Besides the rise in total sales, firms noted an upturn in demand from abroad, particularly from clients based in Asia, Europe, and North America.

Additional staff were recruited to aid firms’ efforts to keep on top of current workloads and in anticipation of further growth in the coming months. The overall pace of job creation was moderate, but above its long-run average.

Indicative of capacity pressures among Indian service firms, backlogs of work continued to expand in September. The rate of accumulation was marginal, however, and slower than in August.

Services firms noted a quicker increase in sales, offsetting the manufacturers’ slowdown. This helped the Composite PMI Output Index rise from 60.9 in August to 61.0, indicating one of the strongest rates of expansion in just under 13 years.

On the price front, input cost inflation retreated substantially in September. The rate of increase was equal to its long-run average and one of the weakest since late 2010. Some firms opted to pass on to their clients additional cost increases by raising selling prices. At the same time, others suggested that charges were left unchanged amid attempts to secure new customers. The overall rate of inflation was solid, though the softest in six months.

Meanwhile, confidence in the outlook improved, with survey members forecasting healthy market dynamics and buoyant demand for the year ahead. The level of positive sentiment was at its highest for over nine years.

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