India Services Sector Activity In October Rises Most In Three Months

The country's services sector expanded at the quickest pace since July, driven by a significant increase in new business orders.

The seasonally adjusted Nikkei India Services Business Activity Index rose to 52.2 in October, from 50.9 in September. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

The services PMI was in the expansion territory for the fifth straight month.

According to panelists, improved order flows supported the pick-up in output amid favourable market conditions, greater client bases and fruitful advertising. This in turn led to robust workforce expansion.

Indian service providers continued to add to their payrolls and the sector witnessed the second-strongest increase in employment since March 2011.

Meanwhile, the Nikkei India Composite PMI Output Index, that maps both the manufacturing as well as the services sector, improved to 53 in October from 51.6 in September; and highlighted the strongest expansion in private sector activity since July.

“The PMI surveys brought positive news of stronger economic growth at the start of the third quarter of the current financial year, together indicating a welcome rebound in private sector expansion from September's four-month low,” said Pollyanna De Lima, Principal Economist at IHS Markit, and author of the report.

On the prices front, cost-inflationary pressures eased, resulting in a softer increase in selling prices.

“Cost pressures faded in October, but service providers continued to report rising costs, especially for food and fuel,” Lima said adding that a robust expansion in workforces added to firms' expenses.

The survey further noted that though the business sentiment remained positive, it was hampered by political uncertainty.