A gauge of India's services sector eased but remained in the expansion zone.
The India Services Business Activity Index, compiled by IHS Markit, stood at 55.2 in September compared with 56.7 in August, according to a media statement. A reading above 50 indicates expansion in business activity.
Even as it retreated from the 18-month high in August, the latest reading remained well above its long-run average.
The Composite PMI Output Index was flat at 55.3 in September.
Where activity growth was reported, panelists mentioned accommodative market conditions and favourable underlying demand amid easing of Covid-19 restrictions, the release said. With the pandemic receding, there was a boost to consumer footfall. This, coupled with marketing efforts, reportedly supported another increase in new business inflows. The rate of expansion was the second-fastest since February 2020.
Buoyed by signs of improvement in underlying demand, Indian service providers took on additional staff during September. The increase in employment ended a nine-month sequence of job shedding, but was marginal overall as some panelists indicated having sufficient workforces to deal with their workloads.
The pace of backlog depletion eased. Amid reports of higher fuel, material, retail and transportation prices, average cost burdens faced by Indian service providers rose further during September. The overall rate of inflation, however, softened to an eight-month low.
Some companies suggested that additional cost burdens were shared with their clients via price hikes. But others refrained from lifting their fees in attempts to secure new work.
Travel restrictions continued to weigh on international demand for Indian services. New export business contracted for the nineteenth month in a row, and at a rate that was the quickest since May.
Yet, business confidence weakened in September. Optimism was curbed by worries regarding inflationary pressures. Where output was predicted to expand over the course of the coming 12 months, firms largely expected the ongoing retreat of the pandemic and associated restrictions to support growth.
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